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

Year Market PQU 1 25.7% 40.0%

2 8.0 −15.0 3 −11.0 −15.0 4 15.0 35.0 5 32.5 10.0 6 13.7 30.0 7 40.0 42.0 8 10.0 −10.0 9 −10.8 −25.0 10 −13.1 25.0 264 Part 3: Stocks and Options