| Date | Market Return | Google Return | Risk-Free Rate |
| 20050131 | -0.026557 | 0.014679 | 0.0016 |
| 20050228 | 0.022695 | -0.039004 | 0.0016 |
| 20050331 | -0.01694 | -0.039789 | 0.0021 |
| 20050429 | -0.025182 | 0.218769 | 0.0021 |
| 20050531 | 0.037916 | 0.260318 | 0.0024 |
| 20050630 | 0.011532 | 0.060879 | 0.0023 |
| 20050729 | 0.043332 | -0.021724 | 0.0024 |
| 20050831 | -0.005942 | -0.006116 | 0.003 |
| 20050930 | 0.010581 | 0.106503 | 0.0029 |
| 20051031 | -0.020786 | 0.175946 | 0.0027 |
| 20051130 | 0.040407 | 0.088065 | 0.0031 |
| 20051230 | 0.003477 | 0.024567 | 0.0032 |
| 20060131 | 0.040113 | 0.042906 | 0.0035 |
| 20060228 | -0.001644 | -0.161883 | 0.0034 |
| 20060331 | 0.019058 | 0.075506 | 0.0037 |
| 20060428 | 0.012969 | 0.071641 | 0.0036 |
| 20060531 | -0.031042 | -0.110351 | 0.0043 |
| 20060630 | -0.000395 | 0.127777 | 0.004 |
| 20060731 | -0.001899 | -0.078053 | 0.004 |
| 20060831 | 0.025083 | -0.020874 | 0.0042 |
| 20060929 | 0.019452 | 0.061739 | 0.0041 |
| 20061031 | 0.037086 | 0.185345 | 0.0041 |
| 20061130 | 0.023717 | 0.017675 | 0.0042 |
| 20061229 | 0.010822 | -0.050185 | 0.004 |
| 20070131 | 0.019439 | 0.089081 | 0.0044 |
| 20070228 | -0.013999 | -0.103789 | 0.0038 |
| 20070330 | 0.012947 | 0.019379 | 0.0043 |
| 20070430 | 0.039891 | 0.028855 | 0.0044 |
| 20070531 | 0.038898 | 0.056279 | 0.0041 |
| 20070629 | -0.014759 | 0.04979 | 0.004 |
| 20070731 | -0.031753 | -0.024297 | 0.004 |
| 20070831 | 0.011624 | 0.010294 | 0.0042 |
| 20070928 | 0.040903 | 0.100961 | 0.0032 |
| 20071031 | 0.025839 | 0.24632 | 0.0032 |
| 20071130 | -0.049279 | -0.019802 | 0.0034 |
| 20071231 | -0.004343 | -0.002193 | 0.0027 |
| 20080131 | -0.062306 | -0.183924 | 0.0021 |
| 20080229 | -0.02204 | -0.165019 | 0.0013 |
| 20080331 | -0.010471 | -0.065177 | 0.0017 |
| 20080430 | 0.051152 | 0.303812 | 0.0017 |
| 20080530 | 0.023825 | 0.020042 | 0.0017 |
| 20080630 | -0.078627 | -0.101366 | 0.0017 |
| 20080731 | -0.013157 | -0.100053 | 0.0015 |
| 20080829 | 0.011044 | -0.022079 | 0.0012 |
Monthly Retums The CAPM Method for the expected return I have given you monthly returns for the stock market, Google, and the three-month treasury (risk-free rate). 1) Run the regression to estimate the beta of Google and report the ouput in a new worksheet. 2) Write the security characteristic line equation (SCL) using the regression output. 3) Suppose that the risk free rate is 0.1% and the market risk premium is 0.4%. Using the beta from Question 1), figure out the expected return for Google based on the CAPM framework Date Market Retum Google Retum Risk-Free Rate 20050131 -0.026557 0.014679 0.0016 20050228 0.022695 -0.039004 0.0016 20050331 -0.01694 -0.039789 0.0021 20050429 -0.025182 0.218769 0.0021 20050531 0.037916 0.260318 0.0024 20050630 0.011532 0.060879 0.0023 20050729 0.043332 -0.021724 0.0024 20050831 -0.005942 -0.006116 0.003 20050930 0.010581 0.106503 0.0029 20051031 -0.020786 0.175946 0.0027 20051130 0.040407 0.088065 0.0031 20051230 0.003477 0.024567 0.0032 20060131 0.040113 0.042906 0.0035 20060228 -0.001644 -0.161883 0.0034 20060331 0.019058 0.075506 0.0037 20060428 0.012969 0.071641 0.0036 20060531 -0.031042 -0.110351 0.0043 20060630 -0.000395 0.127777 0.004 20060731 -0.001899 -0.078053 0.004 20060831 0.025083 -0.020874 0.0042 20060929 0.019452 0.061739 0.0041 20061031 0.037086 0.185345 0.0041 20061130 0.023717 0.017675 0.0042 20061229 0.010822 -0.050185 0.004 20070131 0.019439 0.089081 0.0044 20070228 -0.013999 -0.103789 0.0038 20070330 0.012947 0.019379 0.0043 20070430 0.039891 0.028855 0.0044 20070531 0.038898 0.056279 0.0041 20070629 -0.014759 0.04979 0.004 20070731 -0.031753 -0.024297 0.004 20070831 0.011624 0.010294 0.0042 20070928 0.040903 0.100961 0.0032 20071031 0.025839 0.24632 0.0032 3 20071130 -0.049279 0.019802 0.0034 20071231 -0.004343 0.002193 0.0027 ) 20080131 -0.062306 -0.183924 0.0021 20080229 -0.02204 -0.165019 0.0013 20080331 -0.010471 0.065177 0.0017 20080430 0.051152 0.303812 0.0017 20080530 0.023825 0.020042 0.0017 5 20080630 -0.078627 -0.101366 0.0017 5 20080731 -0.013157 -0.100053 0.0015 7 20080829 0.011044 -0.022079 0.0012 3 20080930 -0.09806 -0.135488 0.0015 20081031 -0.184721 -0.102766 0.0008 20081128 -0.085201 -0.184773 0.0002 1 20081231 0.021471 0.050143 0.0009 2 20090130 -0.077444 0.100374 3 20090227 -0.100963 -0.001595 0.0001 120090331 0.087698 0.029794 0.0001 20090430 0.110553 0.137649 0.0001 5 20090529 0.067336 0.053691 20090630 -0.002779 0.01045 20090731 0.082454 0.050903 0.0001 20090831 0.031887 0.042027 0.0001 20090930 0.045244 0.074036 20091030 -0.028415 0.081214 20091130 0.057381 0.087443 20091231 0.029165 0.06343 Monthly Retums The CAPM Method for the expected return I have given you monthly returns for the stock market, Google, and the three-month treasury (risk-free rate). 1) Run the regression to estimate the beta of Google and report the ouput in a new worksheet. 2) Write the security characteristic line equation (SCL) using the regression output. 3) Suppose that the risk free rate is 0.1% and the market risk premium is 0.4%. Using the beta from Question 1), figure out the expected return for Google based on the CAPM framework Date Market Retum Google Retum Risk-Free Rate 20050131 -0.026557 0.014679 0.0016 20050228 0.022695 -0.039004 0.0016 20050331 -0.01694 -0.039789 0.0021 20050429 -0.025182 0.218769 0.0021 20050531 0.037916 0.260318 0.0024 20050630 0.011532 0.060879 0.0023 20050729 0.043332 -0.021724 0.0024 20050831 -0.005942 -0.006116 0.003 20050930 0.010581 0.106503 0.0029 20051031 -0.020786 0.175946 0.0027 20051130 0.040407 0.088065 0.0031 20051230 0.003477 0.024567 0.0032 20060131 0.040113 0.042906 0.0035 20060228 -0.001644 -0.161883 0.0034 20060331 0.019058 0.075506 0.0037 20060428 0.012969 0.071641 0.0036 20060531 -0.031042 -0.110351 0.0043 20060630 -0.000395 0.127777 0.004 20060731 -0.001899 -0.078053 0.004 20060831 0.025083 -0.020874 0.0042 20060929 0.019452 0.061739 0.0041 20061031 0.037086 0.185345 0.0041 20061130 0.023717 0.017675 0.0042 20061229 0.010822 -0.050185 0.004 20070131 0.019439 0.089081 0.0044 20070228 -0.013999 -0.103789 0.0038 20070330 0.012947 0.019379 0.0043 20070430 0.039891 0.028855 0.0044 20070531 0.038898 0.056279 0.0041 20070629 -0.014759 0.04979 0.004 20070731 -0.031753 -0.024297 0.004 20070831 0.011624 0.010294 0.0042 20070928 0.040903 0.100961 0.0032 20071031 0.025839 0.24632 0.0032 3 20071130 -0.049279 0.019802 0.0034 20071231 -0.004343 0.002193 0.0027 ) 20080131 -0.062306 -0.183924 0.0021 20080229 -0.02204 -0.165019 0.0013 20080331 -0.010471 0.065177 0.0017 20080430 0.051152 0.303812 0.0017 20080530 0.023825 0.020042 0.0017 5 20080630 -0.078627 -0.101366 0.0017 5 20080731 -0.013157 -0.100053 0.0015 7 20080829 0.011044 -0.022079 0.0012 3 20080930 -0.09806 -0.135488 0.0015 20081031 -0.184721 -0.102766 0.0008 20081128 -0.085201 -0.184773 0.0002 1 20081231 0.021471 0.050143 0.0009 2 20090130 -0.077444 0.100374 3 20090227 -0.100963 -0.001595 0.0001 120090331 0.087698 0.029794 0.0001 20090430 0.110553 0.137649 0.0001 5 20090529 0.067336 0.053691 20090630 -0.002779 0.01045 20090731 0.082454 0.050903 0.0001 20090831 0.031887 0.042027 0.0001 20090930 0.045244 0.074036 20091030 -0.028415 0.081214 20091130 0.057381 0.087443 20091231 0.029165 0.06343
