The volatility of a stock is often measured by its beta value.

You can estimate the beta value of a stock by developing a simple linear regression

model, using the weekly percentage change in the stock $($returns series$)$ as the

dependent variable and the weekly percentage change in a market index $($return series$)$

as the independent variable.

The ASX ALL ORDINARIES index is a common index to use. For example, if you wanted to

estimate the beta value for ABC Company, you could use the following model, which is

sometimes referred to as a market model:

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The least$-$squares regression estimate of slope b$1$ estimates the beta value for ABC

Company. A stock with a beta value of $1\mathrm{.}0$ tends to move the same as the overall market.

A stock with a beta value of $1\mathrm{.}5$ tends to move $50\%$ more than the overall market, and a

stock with a beta value of $0\mathrm{.}6$ tends to move only $60\%$ as much as the overall market.

Stocks with negative beta values tend to move in the opposite direction of the overall

market.

The ASX ALL ORDINARIES index tracks the overall movement of the stock market by

considering the stock prices of all listed corporations on ASX.

Using the given data sets $($your company data and ASX ALL ORDINARIES return series$)$

AND simple ordinary least squares regression$-$based solutions $($A computer printout is

an acceptable solution here$),$ answer the following:

$1.$ Estimate the market model for your assigned company.

Group $27,30$ and $31$ BHP$,$ Group $28,29,$ and $32$ Qantas

$2.$ Write a summary of your findings.

Discuss the estimated market model.

Explain your reasons.

$3.$ Interpret the beta value.

$4.$ How can investors use the beta value as a guide for investing?

Source: Data extracted from LSEG Eikon Workspace Data.

Your presentation should outline:

$-$ how this problem was tackled,

$-$ the methodology used,

$-$ the justification for the solution reached and

$-$ an interpretation of your result