A firm wishes to estimate graphically the betas for two assets, A and B. It has gathered the return data shown in the following table for the market portfolio and for both assets over the last 10 years, 2003–2012.

a. On a set of "market return (x axis)–asset return (y axis)" axes, use the data given to draw the characteristic line for asset A and for asset B.
b. Use the characteristic lines from part a to estimate the betas for assets A and B.
c. Use the betas found in part b to comment on the relative risks of assets A andB.

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Actual rcturn Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Market portfolio Assct A Asset B 6% 11% 16% -13 4 -10 4 16 10 15 19 14 18 12 17 30 29 19 26 13