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Problem 1:1) Use CAPM to estimate the betas of Microsoft (MSFT) and Facebook (FB). You need to use both (a) the OLS (i.e. Linear Regression)

Problem 1:1) Use CAPM to estimate the betas of Microsoft (MSFT) and Facebook (FB). You need to use both (a) the OLS (i.e. Linear Regression) method and (b) the COVARIANCE.S and VAR.S functions to calculate beta. Compare your results by using OLS method with the results by using COVARIANCE.S and VAR.S functions. 2) Illustrate your understanding of beta.3) Compare betas of these two companies and give possible explanations about why they are different.Use historical data from Yahoo! Finance, and download the monthly Adj. Close Price from January, 2015 to December, 2019Use S&P 500 (^GSPC) to estimate the expected return on the market portfolio. (Use risk free rate below)

Date. Last Trading Day of the Month Risk-Free Return Rate (One Month Treasury Bill Rate)
20150130 0.000%
20150227 0.000%
20150331 0.000%
20150430 0.000%
20150529 0.000%
20150630 0.000%
20150731 0.000%
20150831 0.000%
20150930 0.000%
20151030 0.000%
20151130 0.000%
20151231 0.010%
20160129 0.010%
20160229 0.020%
20160331 0.020%
20160429 0.010%
20160531 0.010%
20160630 0.020%
20160729 0.020%
20160831 0.020%
20160930 0.020%
20161031 0.020%
20161130 0.010%
20161230 0.030%
20170131 0.040%
20170228 0.040%
20170331 0.030%
20170428 0.050%
20170531 0.060%
20170630 0.060%
20170731 0.070%
20170831 0.090%
20170929 0.090%
20171031 0.090%
20171130 0.080%
20171229 0.090%
20180131 0.110%
20180228 0.110%
20180329 0.120%
20180430 0.140%
20180531 0.140%
20180629 0.140%
20180731 0.160%
20180831 0.160%
20180928 0.150%
20181031 0.190%
20181130 0.180%
20181231 0.190%
20190131 0.210%
20190228 0.180%
20190329 0.190%
20190430 0.210%
20190531 0.210%
20190628 0.180%
20190731 0.190%
20190830 0.160%
20190930 0.180%
20191031 0.150%
20191129 0.120%
20191231 0.140%

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