The data for three years for 2 investments are given below: (Assume a population so use n not n-1):

A) For the above information, first compute the beta and then find the alpha of the regression of y (dependent variable) on the market X (independent variable).

B) Can you forecast year 5 if x=13?

Year i Market Return Stock Return Y X Prob. 1 2 3 .333 2 6 .333 3 7 9 .333 Compute: (Note: Highlight and copy the matrix to the blue area below and then fill in!) Std. Answers: mean Variance Covariance Correlation Dev Y X