b. Average the returns for each month to give the return on an equally weighted portfolio of the stocks. Then calculate the industry beta using these portfolio returns. How does the R2 of this portfolio compare with the average R2 of the individual stocks?

c. Use the CAPM to calculate an average cost of equity (requity) for the food industry.

Use current interest rates—take a look at the discussion of what is the risk-free rate? in Section 9-1—and a reasonable estimate of the market risk premium.