Your CIO is asking you to compute each stocks sensitivity (i.e. ) to the equity market using the same monthly data for the previous 5 years. After talking to your investment team, you decide to use the S&P 500 as the market portfolio (SPY).

(b) Which stock has the highest and lowest beta? Why? Please comment

Please explain why amazon has the highest beta and why nike has the lowest beta.

NKE AMZN SBUX TGT YUM Beta Slope of CAPM Formua by hand S&P 500 1.000 0.776 0.812 0.966 1.247 1.247 0.857 0.857 0.776 0.812 0.966 1.000 Alpha 0.011 0.023 0.008 0.010 0.005 0.000