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Graphical derivation of beta A firm wishes to estimate graphically the betas for two assets, A and B. It has gathered the return data shown

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Graphical derivation of beta 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: a. Which of the following graphs represents the graphical derivation of bela 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. Data table (Click on the icon located on the top-right corner of the data table be copy its contents into a spreadsheet.) a. Which of the following graphs represents the graphical derivation of beta for assets A and B? (Select the best answer below.) OA OB Beta Derivation Beta Derivation 15- 15- 10 Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Annual return Market portfolio Asset A 6% 11% 2% 3% - 13% -4% -4% 3% - 8% 0% 16% 19% 10% 14% 15% 18% 8% 12% 13% 17% Asset E 16% 11% - 10% 396 -3% 30% 22% 29% 19% 26% 2015-10 5 to 15 20 - -104 2015 2015 20 -5- -104 -15 -Asset A - -20 - Asset B Market Return (56) -15 Asse A Asset B Market Return (%) Oc. OD. Beta Derivation 201 Print Done Beta Derivation 201 15- 15- 10-1 10-1 -20.15-10-S 5 10 15 20 -20 -110 51 10 15 20

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