Graphical derivation of beta A firm wishes to extimate graphically the betas for

Question

Graphical derivation of beta

A firm wishes to extimate graphically the betas for two assets, A and B. It has gathered the return data shown in the following tables for the market portfolio and for both assets over the last 10 years, 2006-2015.

a) ON a set of "market return (x axis) - asset return ( y axis)" axex, use the data given to draw the characteristic line for asset A and for asset B.

b) Use the characteristic line from part a to estimate the betas for assets A and B.

c) Use the betas found in part b to comment on the relative risks of assets A and B.

Year Market Portfolio Asset A Asset B 2006 6% 11% 16% 2007 2 8 11 2008 -13 -4 -10 2009 -4 3 3 2010 -8 0 -3 2011 16 19 20 2012 10 14 22 2013 15 18 29 2014 8 12 19 2015 13 17 26

Explanation / Answer

Graphical derivation of beta A firm wishes to extimate graphically the betas for

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.