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Use the JMarket Portfolio return as a measure of the overall stock market performance, and estimate a regression of each stock's monthly returns on the
- Use the JMarket Portfolio return as a measure of the overall stock market performance, and estimate a regression of each stock's monthly returns on the returns of this market index.The slope coefficient in each regression is a measure of that stock's beta.Which beta is higher?What does this mean?
2.Use your estimate of each stock's beta and the Capital Asset Pricing Model to calculate the expected annual rate of return for each stock.Current 10-year Treasury bond rates are approximately 2.25%, and historically the average stock has outperformed the risk-free rate by about 7%
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