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Estimating Firm B's The Capital Asset Pricing Model (CAPM) relates the expected excess return on an asset to the expected excess return on the "market portfolio": R - R! = a + B(R" - R!) where a (the intercept) is assumed to be zero in theory, but you should include it in your estimation. You will estimate / (the slope) for a few individual stocks. Collect data from Yahoo Finance (finance.yahoo.com) and compute estimates of B (one for each firm) for the following firms for the calendar years 1990 through 1999: 1. Home Depot (HD) 2. Apple (AAPL) 3. Verizon (VZ) 4. Cisco (CSCO) For each stock you will have to download data, choose an appropriate market index, construct excess returns, and decide on a relevant frequency of data (daily, weekly, monthly ...). In collecting your dataset, you might also find the following website useful: http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html As a write-up construct and fill in the table on the next page and use a maximum of one page of text to explain/justify your choice of indexes and data frequency, and discuss the estimates and tests related to a and B. Data Collection Choices: Variables Data source and/or index used Data frequency used R: Return for each stock HD AAPL VZ CSCO Rf: Return on a safe, risk-free investment Rm: Return on the "market portfolio" Estimates and p-values: Construct HD AAPL VZ CSCO E(R): Average Return a p-value for Ho: a = 0 B p-value for Ho: B = 0