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Use the dataset Homework2_Data1 and a simple linear regression model to calculate the beta of the stock ABC based on CAPM (see Lecture 5). Please

Use the dataset Homework2_Data1 and a simple linear regression model to calculate the beta of the stock ABC based on CAPM (see Lecture 5). Please notice that the variables are stock return and overall stock market return. Assume the significance level is 5%.

  1. Draw the scatter plot and the fitted straight line and insert the image below (hint: use function plot and abline. See my R lecture videos for examples)
  2. Please write the regression equation (Format example: Y = 2 + 5X. You need to insert the regression coefficients into the regression equation)
Date SP500_Return ABC_Return
2/1/17 3.72% -5.37%
1/3/17 1.79% 5.30%
12/1/16 1.82% -0.41%
11/1/16 3.42% 1.44%
10/3/16 -1.94% -5.91%
9/1/16 -0.12% 0.11%
8/1/16 -0.12% 7.04%
7/1/16 3.56% 1.81%
6/1/16 0.09% 3.24%
5/2/16 1.53% 2.59%
4/1/16 0.27% 3.66%
3/1/16 6.60% 6.29%
2/1/16 -0.41% -0.90%
1/4/16 -5.07% -4.08%
12/1/15 -1.75% 0.51%
11/2/15 0.05% 1.62%
10/1/15 8.30% 5.63%
9/1/15 -2.64% -7.51%
8/3/15 -6.26% -8.66%
7/1/15 1.97% 3.56%
6/1/15 -2.10% -5.79%
5/1/15 1.05% 2.22%
4/1/15 0.85% 3.63%
3/2/15 -1.74% -1.02%
2/2/15 5.49% -2.88%
1/2/15 -3.10% 6.14%
12/1/14 -0.42% -5.27%
11/3/14 2.45% 4.25%
10/1/14 2.32% -2.25%
9/2/14 -1.55% -0.67%
8/1/14 3.77% 5.93%
7/1/14 -1.51% -1.91%
6/2/14 1.91% 0.74%
5/1/14 2.10% -1.21%
4/1/14 0.62% 3.17%
3/3/14 0.69% 0.39%
2/3/14 4.31% 7.60%
1/2/14 -3.56% 5.82%
12/2/13 2.36% 1.36%
11/1/13 2.80% 10.50%
10/1/13 4.46% -5.29%
9/3/13 2.97% 1.59%
8/1/13 -3.13% -1.84%
7/1/13 4.95% 3.71%
6/3/13 -1.50% 0.39%
5/1/13 2.08% -0.65%
4/1/13 1.81% 6.34%
3/1/13 3.60% 4.43%
2/1/13 1.11% -1.19%
1/2/13 5.04% 5.63%
12/3/12 0.71% -6.70%
11/1/12 0.28% -2.90%
10/1/12 -1.98% 1.17%
9/4/12 2.42% 5.75%
8/1/12 1.98% -2.53%
7/2/12 1.26% 5.79%

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