6 The following figures relate to monthly observations of the return on a widely used stock market index (R_m)

and the return on a particular ordinary share (R_j) 2over a period of six months.

(a) Plot these data on a graph and deduce the value of the Beta coefficient.

(b) To what extent are variations in R_m due to specific risk factors?

(c) Calculate the systematic risk of the security. (NB: ) systematic risk

Transcribed Image Text:

Month Ra R 123456 5 4 -10 -8 12 9.6 -4 347 3 2.4 -3.2 5.6