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You have collected returns on AnaDone , a large diversified manufacturing firm, and the NYSE index for five years: Year Returns (%) for AnaDone Returns

You have collected returns on AnaDone , a large diversified manufacturing firm, and the NYSE index for five years:

Year Returns (%) for AnaDone Returns (%) for NYSE
1981 10 5
1982 5 15
1983 -5 8
1984 20 12
1985 -5 -5

a. Estimate the intercept (alpha) and slope (beta) of the regression. b. If you bought stock in AnaDone today, how much would you expect to make as a return over the next year? (The six-month Treasure bill rate is 6 percent.)

c. Looking back over the past five years, how would you evaluate AnaDones performance relative to the market? d. Assume now that you are an undiversified investor and that you have all of your money invested in AnaDone. What would be a good measure of the risk that you are taking on? How much of this risk would you be able to eliminate if you diversify? e. AnaDone is planning to sell off one of its divisions. The division under consideration has assets which comprise half of the book value of AnaDone and 20 percent of the market value. Its beta is twice the average beta for AnaDone (before divestment). What will the beta of AnaDone be after divesting this division?

Kindly provide the detailed steps for this as I cant seem to understand how to get Alpha. Also, please use excel for the first part if possible with the steps clearly indicated. thanks!

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