The file P13_46.XLS contains monthly returns on Anheiser-Busch (AB) and a market index for the period 1988-1993. Use these data to answer the following questions:

a. What percentage of the variation in the return in AB is explained by variation in the market? What percentage is unexplained by variation in the market?

b. Predict the change in AB during a month in which the market goes up by 2%. 

c. Use Excel’s CORREL functions to determine the correlation between the return on AB and the market. Verify that this correlation between AB and the market is equal to the square root of R² from the regression output.

d. Estimate the beta for AB by using regression. Then verify that it can also be found (using Excel’s COVAR and VARP functions) from 

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Covariance between AB and Market Variance of Market