Question
You can obtain stock pricing and values from finance.yahoo.com or any other credible stock pricing site. 2. Identify a sample of food companies. For example,
You can obtain stock pricing and values from finance.yahoo.com or any other credible stock pricing site.
2. Identify a sample of food companies. For example, you could try Campbell Soup (CPB), General Mills (GIS), Kellogg (K), Kraft Foods (KFT), and Sara Lee (SLE). a. Estimate beta and R2 for each company, using five years of monthly returns and Excel functions SLOPE and RSQ. b. Average the returns for each month to give the return on an equally weighted portfolio of the stocks. Then calculate the industry beta using these portfolio returns. How does the R2 of this portfolio compare with the average R2 of the individual stocks? c. Use the CAPM to calculate an average cost of equity (r equity) for the food industry. Use current interest ratestake a look at the end of Section 92and a reasonable estimate of the market risk premium.
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