Refer to the discussion of beta values and market models in Problem 13.49 on page 553. The S&P 500 Index tracks the overall movement of the stock market by considering the stock prices of 500 large corporations. The file contains 2009 weekly data for the S&P 500 and three companies. The following variables are included:
WEEK-Week ending on date given
S&P-Weekly closing value for the S&P 500 Index
GE-Weekly closing stock price for General Electric
DISC-Weekly closing stock price for Discovery Communications
AAPL-Weekly closing stock price for Apple
a. Estimate the market model for GE. (Hint: Use the percentage change in the S&P 500 Index as the independent variable and the percentage change in GE's stock price as the dependent variable.)
b. Interpret the beta value for GE.
c. Repeat (a) and (b) for Discovery.
d. Repeat (a) and (b) for Apple.
e. Write a brief summary of your findings.