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In most finance text books, you are told that all you need to do to estimate the beta for a stock is to run a
In most finance text books, you are told that all you need to do to estimate the beta for a stock is to run a regression of returns on the stock against returns on the market index. The slope of the line is, of course, the beta. I have taken one company, GameStop, and estimated its beta against S&P500 . The result of the regression is shown below. Questions: (Each 2 points)
- If you are analyzing GameStop and were required to use this regression betas, would you? If not, why not? What would you use instead?
- During the period of the regression, GameStop had incredible volatility but its beta does not seem to reflect it. Explain why.
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