PLEASE SHOW THE STEPS AND FORMULAS. THANK YOU A. Compute the Beta Coefficient fo

Question

PLEASE SHOW THE STEPS AND FORMULAS. THANK YOU

A. Compute the Beta Coefficient for Stock X and Stock Y using both regression and the formula given in your text. Highlight your answers in red.
     Did both methods result in the same answer?
B. What is Sharpe's Beta Coefficient? What does it mean, and why did Sharpe publish it?

Stock X Market Stock Y Market 0.11 0.13 0.14 0.13 0.19 0.1 0.07 0.1 -0.16 -0.12 -0.05 -0.12 0.03 0.01 0.01 0.01 0.2 0.15 0.11 0.15 0.04 0.06 0.12 1.6 0.03 0.05 0.11 0.14 -0.22 -0.02 0.15 0.11 0.1 0.11 -0.2 -0.06 0.08 0.09 0.02 0.01 0.03 -0.01 0.01 0.11

Explanation / Answer

As per Sharp

For Stock X:

Corelation=0.85

Standard Devn(X)=0.13

Standard Devn(Market)=0.079

Beta as per Sharp=( .13*0.079*0.85)/(0.85^2)

=0.012

For Stock Y:

Corelation=0.38

Standard Devn(X)=0.10

Standard Devn(Market)=0.47

Beta as per Sharp=( 0.10*0.47*0.38)/(0.38^2)

=0.13

By Regression method

Beta for stock X = 0.52

Beta for Stock Y =1.76

Sharps beta coefficient means the slope of the line. it is used to calculate alpha value.hence it was published in suppport of CAPM model.

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