Suppose you have the following historical returns for the stock market and for another company, P.Q. Unlimited.

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Suppose you have the following historical returns for the stock market and for another company, P.Q. Unlimited. Explain how to calculate beta, and use the historical stock returns to calculate the beta for PQU. Interpret yourresults.

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Corporate Finance A Focused Approach

ISBN: 978-1439078082

4th Edition

Authors: Michael C. Ehrhardt, Eugene F. Brigham

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Question Posted: Sep 23, 2011 10:05 AM

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Suppose you have the following historical returns for the stock market and for another company, P.Q. Unlimited.

Question:

YEAR MARKET PQU 25.7% 40.0% 2 8.0% -15.0% -11.0% -15.0% 4 15.0% 35.0% 32.5% 10.0% 13.7% 30.0% 40.0% 42.0% 10.0% -10.0% -10.8% -25.0% 10 -13.1% 25.0%

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Betas are calculated as the slope of the characteristic line which is the regression line s...View the full answer

Corporate Finance A Focused Approach

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