Question
Please help me understand the following problem for my study notes. Calculate the return on the ENI share and on the Italian index over 13
Please help me understand the following problem for my study notes.
Calculate the return on the ENI share and on the Italian index over 13 months until 1 Jan 2011. To help you, you have a record of the share price and of the
general index. HERE IS THE TABLE
PERIOD JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN
10 10 10 10 10 10 10 10 10 10 10 10 11
ENI 16.93 16.57 17.37 16.86 15.2 15.19 15.69 15.67 15.83 16.19 15.50 16.34 17.30
Italian index 21896 21068 22847 21562 19544 19311 21021 19734 20505 21450 19105 20173 22050
The questions are:
What is the total risk of the ENI share?
What is the beta coefficient of ENI?
What portion of the total risk of the ENI share is explained by market risk?
My notes have the answers, I don't understand how they were reached. WHAT FORMULA WAS USED TO GET:
Returns on the ENI share - 17.30/16.93 -1 = 2.2%
I see this is the ending and beginning number for ENI but that's all I get. What formula is used? Why -1?
Returns on the Italian index - 22050/21896 = 0.7%
SAME QUESTIONS BUT WHY DID THEY NOT -1?
Index risk - o' =7.35%
Beta = 0.56; 89.6 (0.56 X 7.35%)/4.59%
I am driving myself crazy with this, please help. This is the third time I asked this question.
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