Suppose you have the following historical returns for the stock market and for another company, P.Q. Unlimited.

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Suppose you have the following historical returns for the stock market and for another company, P.Q. Unlimited. Explain how to calculate beta, and use the historical stock returns to calculate the beta for PQU. Interpret your results.

YEAR MARKET PQU 25.7% 40.0% -15.0% 8.0% -11.0% 3 -15.0% 35.0% 10.0% 15.0% 32.5% 13.7% 30.0% 40.0% 42.0% 10.0% -10.0% -25

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Financial management theory and practice

ISBN: 978-0324422696

12th Edition

Authors: Eugene F. Brigham and Michael C. Ehrhardt

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Question Posted: Mar 25, 2010 05:54 AM

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Suppose you have the following historical returns for the stock market and for another company, P.Q. Unlimited.

Question:

YEAR MARKET PQU 25.7% 40.0% -15.0% 8.0% -11.0% 3 -15.0% 35.0% 10.0% 15.0% 32.5% 13.7% 30.0% 40.0% 42.0% 10.0% -10.0% -25.0% -10.8% 10 -13.1% 25.0%

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Betas are calculated as the slope of the characteristic line which is the regression line s...View the full answer

Financial management theory and practice

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