The tendency of a stock's price to move up and down with the market is reflected in its beta coefficient Therefore, beta is a measure of an investment's market risk, and is a key element of the CAPM In this part of the project, you get financial information using Yahoo Finance (found at http finance yahoo com ) To find a company's beta, enter the desired stock symbol and request a basic quote Once you have the basic quote, select the Key Statistics Scroll down this page to find the stock's beta From Yahoo Finance obtain a report on any two companies 1 What are the betas listed for these companies 2 If you made an equal dollar investment in each stocks what would be the beta of your portfolio 3 Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate the required return on these two stocks Assumptions and Data Note that you will need the risk free rate and the market risk premium Assume a 5 market risk premium To get the current yield on 10 year Treasury securities go to Finance Yahoos (www finance yahoo com) click on Market Data Bonds You will use the current yield on 10 year Treasury securities as the risk free rate to estimate the required rate of return on stocks 4 Compare the required return on these stocks calculated using CAPM in question 3 against the market's historical return over the last 52 weeks Is there a difference between these returns Is this a problem Why is there a difference

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The tendency of a stock's price to move up and down with the market is reflected in its beta coefficient. Therefore, beta is a measure

The tendency of a stock's price to move up and down with the market is reflected in its beta coefficient. Therefore, beta is a measure of an investment's market risk, and is a key element of the CAPM. In this part of the project, you get financial information using Yahoo!Finance (found at http://finance.yahoo.com/ )

To find a company's beta, enter the desired stock symbol and request a basic quote. Once you have the basic quote, select the "Key Statistics". Scroll down this page to find the stock's beta.

From Yahoo!Finance obtain a report on any two companies.

1.What are the betas listed for these companies?
2.If you made an equal dollar investment in each stocks what would be the beta of your portfolio?
3.Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate the required return on these two stocks. Assumptions and Data: Note that you will need the risk-free rate and the market risk premium. Assume a 5% market risk premium. To get the current yield on 10-year Treasury securities go to Finance!Yahoos (www.finance.yahoo.com) -click on Market Data - Bonds. You will use the current yield on 10-year Treasury securities as the risk-free rate to estimate the required rate of return on stocks.
4.Compare the required return on these stocks calculated using CAPM in question #3 against the market's historical return over the last 52 weeks. Is there a difference between these returns? Is this a problem? Why is there a difference?