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Use AT&Tas your public trading stock company and estimate its beta using regression method , as follow: First download your stock's data in your Excel:

Use AT&Tas your public trading stock company and estimate its beta usingregression method, as follow:

First download your stock's data in your Excel:

  1. Download 3 years of monthly price of your stock
  2. Download 3 years of monthly price of SPY (S&P 500) in the same Excel
  3. Estimate the monthly returns of your stock & SPY
  4. Then run a regression in Excel, Y-axis = your stock return and X-axis = SPY return, the slope of this regression is your estimated beta.
  5. Compare your estimated beta with published betas (For example from Yahoo, Reuter, or Morningstar).
  6. Using the beta you estimated above, estimate the required rate of return of your chosen stock according to CAPM.
  7. Estimate the beta of your stock using: bi= (i/M)*iM

WhereiandMare standard deviation of stock i(your stock) andstandard deviation of the Market(SPY) andiMis the correlation of return of stock i with the returns of the market market. So, the risk increases asiandiMincreases.

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