Question
A firm wishes to estimate graphically the betas for two assets, A and B. It has gathered the return data shown in the following table
A firm wishes to estimate graphically the betas for two assets, A and B. It has gathered the return data shown in the following table for the market portfolio and for both assets over the last 10 years, 2009-2018: Year Annual return Market portfolio Asset A Asset B 2009 6% 11% 16% 2010 2% 8% 11% 2011 13% 4% 10% 2012 4% 3% 3% 2013 8% 0% 3% 2014 16% 19% 30% 2015 10% 14% 22% 2016 15% 18% 29% 2017 8% 12% 19% 2018 13% 17% 26% .Which of the following graphs represents the graphical derivation of beta for assets A and B? b.Use the characteristic lines from part a to estimate the betas for assets A and B. c.Use the betas found in part b to comment on the relative risks of assets A and B.
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