3. Calculate the central tendency of the betas of the companies in the sample. Often the median...

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3. Calculate the central tendency of the betas of the companies in the sample.

Often the median is the best measure to use, because the arithmetic average is distorted by outliers. Sometimes a modal value will be best. In still other cases you may wish to weight the betas on the basis of the relative market capitalizations of the proxy companies (share price times the number of shares outstanding).

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