You are to analyze your firm$$s risk and return measures and compare them to the results for your firm$$s key competitor. You may use whatever source of data you want for the calculations, but they should all be from the same source so that the results are comparable. Indicate the source for your data at the end of your memo.

First, calculate the rate of return for each firm for the last $10$ years. Rate of return includes both the dollar amount at the end of the year and the dividend received. The amount invested is the cost of the investment. Put the statistics $($including arithmetic average return, geometric average return, variance, and correlation between both firms in your appendices in a table and discuss in the memo.

Second, use the probabilities method to calculate an expected rate of return for the two firms. The probabilities for the three states of demand are simply your estimate for rate of return for next year for each firm. The probabilities do not have to be the same for each firm. You can use the rates of return you calculate in $2$ above or estimate the worst case, normal case, and best case for the firms$$ rates of return in the last ten years. Put your results in table format in the appendices and discuss the assumptions you made and the results in the memo.

Third, calculate the variance and standard deviation for each of the firms. Put the results in a table in the appendices and discuss the results in the memo.

Fourth, estimate the beta for your firm and its key competitor. Show the regression results in your appendices, including alpha, beta, error term, confidence intervals, and R square. $($a$.)$ In addition, find at least three different sources for the betas for both firms. Put them in a table in the appendices and discuss the betas and your explanation for the differences in betas by source and your calculation in the memo. $($b$.)$ Compare your calculated standard deviation foreach firm and its betas and discuss what you think the two measures are telling you about the riskiness of each of the firms.

Fifth, calculate the required return for both firms based on the SML equation $($graphical depiction of the CAPM$).$ Put the calculations in a table format in the appendices and discuss your assumptions and results in the report.

Include all sources used for this memo at the end of the memo.

Write your report based on your analysis. From the syllabus, $$Each group will be required to turn$-$in a written report that summarizes the analysis of the problem$($s$)$ and solutions as well as supporting tables and graphs and additional research.$$