Part I: Single Factor Model Estimation

Go to finance.yahoo.com and download monthly historical price data over the $5-$year period from February $28,2019$ to February $27,2024$ of the following stocks or fund:

a$.$ S&P $500$ index ETF $($ticker: SPY$)$

b$.$ Tesla $($ticker: TSLA$)$

c$.$ Nvidia $($ticker: NVDA$)$

d$.$ One of your favorite stocks or funds in your simulation portfolio $($Google$)$

Using the adjusted closing prices and T$-$bill rate of approximately $0\mathrm{.}4\%$ per month $($for simplicity, we assume this risk$-$free rate is constant$),$ please answer the following questions:

$(1)$ Assuming CAPM is correct, run regression and estimate beta of each individual stock using S&P$500$ index as a proxy for the market portfolio.

$(2)$ Please estimate alpha of each stock using S&P $500$ index as a proxy for the market portfolio.

$(3)$ Assuming CAPM is correct, graph Security Market Line $($SML$).$ Use S&P $500$ index ETF data to estimate the market risk premium.

$(4)$ Which stock$/$fund has the highest alpha and which stock$/$fund has the lowest alpha?