Using Alaska Airlines:

Here is the formula: R_S = R_F + Beta (R_M-R_F). I need to calculate R_M and R_F to and beta of your stocks to estimate Rs.

How to get R_M and R_F to and beta?

Go to Yahoo Finance or Google Finance and find Beta for Alaska Airline stocks.

S&P 500 index is a good proxy for return on the market (R_M). To find R_M, go to Yahoo!Finance to get the monthly close price of S&P 500 Index for the last 30 years (January 1, 1985 to December 31, 2014) , click on this link (http://finance.yahoo.com/q/hp?s=%5EGSPC+Historical+Prices (Links to an external site.) ), which will take you to historical price of S&P 500 index. Then click on historical price, change the start date and end date, select monthly and then click on get price. If you scroll down you will see download to spreadsheet. Once you download the data, just leave date and adjusted close price. Then calculate monthly return using adjusted close price of S&P 500 index and calculate average return using average function in Excel. You can use the average return as R_M.

To find R_F go to Federal Reserve Website ( http://www.federalreserve.gov/releases/h15/data.htm ) and get Treasury constant maturities 7-year monthly rates for the last 30 years (January 1, 1985 to December 31, 2014). Download the monthly rates and calculate the average rate using average function in excel. You can use the average rates on Treasury as R_F.

Now you have R_M, R_F and Beta. Put them in the following formula to get R_S for your companies: R_S = R_F + Beta (R_M-R_F).

Please explain step by step.