of 3 + Part II: Historical Returns and Risk In this section, we'll collect data for Microsoft Corporation (MSFT) in order to calculate its historical average returns, and estimate its beta with the market. To find the data, you can type *MSFT" into the search bar on Yahoo Finance. This will bring you to the page about Microsoft's stock. To get historical prices, click on "Historical Data. We'll want monthly returns, so you must adjust "Frequency" to "Monthly" and then hit "Apply." Q2.1 The "Close" column tells us what the price was at the market close on a particular date. The adjusted close accounts for dividends and stock splits - this adjustment will allow us to use the percentage change in the adjusted price as a measure of stock returns. a) What is the adjusted close price on July 31 2021 for MSFT? b) Why is this price different from the close price? Q2.2 We saw that the stock return is equal to (P1 - PO)/Po when there are no dividends. a) What was the return of Microsoft stock from September 30 to October 31 2021? b) What was the arithmetic) average monthly return of Microsoft from October 2011 to October 2021? c) What was the total return for Microsoft from October 2011 to October 2021? Q2.3 The systematic risk of a stock is measured by its Beta, We get beta through a regression of the stock's return in excess of the risk free rate (ters) onto the market's return in excess of the risk free rate (2) a) What is the Beta (6Y Monthly) for MSFT in Yahoo Finance? b) Calculote Beta yourself in Excel by regressing the MSFT excess returns onto the market's excess returns using monthly data spanning October 2011 to October 2021. You can get the market returns and the risk free rate each month from Kenneth French's website: http://mba.tuck dartmouth.edu/pages/faculty/ken.french/ftp/F- F'Research Date Factor CSV.zip Note that you have to divide returns by 100 to get them into decimal form. Also note that since all you need is Beta, a shortcut is to use Excel's slope function. If you had MSFT returns minus , in column A and (rm-rf) in column B, you could get the beta with the function "Slope A1:A120,B1:B120) c) Are these numbers different? If so, why? d) I. Microsoft more or less risky than an average stock on the market? ( Type here to search ORI E of 3 + Part II: Historical Returns and Risk In this section, we'll collect data for Microsoft Corporation (MSFT) in order to calculate its historical average returns, and estimate its beta with the market. To find the data, you can type *MSFT" into the search bar on Yahoo Finance. This will bring you to the page about Microsoft's stock. To get historical prices, click on "Historical Data. We'll want monthly returns, so you must adjust "Frequency" to "Monthly" and then hit "Apply." Q2.1 The "Close" column tells us what the price was at the market close on a particular date. The adjusted close accounts for dividends and stock splits - this adjustment will allow us to use the percentage change in the adjusted price as a measure of stock returns. a) What is the adjusted close price on July 31 2021 for MSFT? b) Why is this price different from the close price? Q2.2 We saw that the stock return is equal to (P1 - PO)/Po when there are no dividends. a) What was the return of Microsoft stock from September 30 to October 31 2021? b) What was the arithmetic) average monthly return of Microsoft from October 2011 to October 2021? c) What was the total return for Microsoft from October 2011 to October 2021? Q2.3 The systematic risk of a stock is measured by its Beta, We get beta through a regression of the stock's return in excess of the risk free rate (ters) onto the market's return in excess of the risk free rate (2) a) What is the Beta (6Y Monthly) for MSFT in Yahoo Finance? b) Calculote Beta yourself in Excel by regressing the MSFT excess returns onto the market's excess returns using monthly data spanning October 2011 to October 2021. You can get the market returns and the risk free rate each month from Kenneth French's website: http://mba.tuck dartmouth.edu/pages/faculty/ken.french/ftp/F- F'Research Date Factor CSV.zip Note that you have to divide returns by 100 to get them into decimal form. Also note that since all you need is Beta, a shortcut is to use Excel's slope function. If you had MSFT returns minus , in column A and (rm-rf) in column B, you could get the beta with the function "Slope A1:A120,B1:B120) c) Are these numbers different? If so, why? d) I. Microsoft more or less risky than an average stock on the market? ( Type here to search ORI E
