Calculate the beta by performing regression analysis

Assignment Help Financial Management

Reference no: EM131893350

FIRM: Apple, Inc

Market Symbol: APPL

a) Get the last five years of monthly stock returns for this firm. Choose at least two market indices (example S&P 500 and NASDAQ). Calculate the monthly market returns.

Now use the equation for calculating beta – that is, the ratio of stock covariance with the market divided by the market variance to calculate two betas, one for each market index chosen

b) Repeat above step, but with one year of weekly returns

c) Calculate the beta by performing regression analysis with five years of monthly stock returns, using the two market indices in turn

d) Find the beta from a published source such as Yahoo! Finance or Value Line

e) Now that you have seven different betas for this one stock,* decide which one is the most appropriate. Be sure to reflect on the choice of market index, the length of time for observation, the methodology, and most importantly, the current level of risk (business and financial) faced by the industry as well as the firm being analyzed.

* Seven betas are as follows: in part (a) five-year monthly returns + S&P 500 and five-year monthly returns + NASDAQ ; in part (b) one-year weekly returns + S&P 500 and one-year weekly returns + NASDAQ; in part (c) five-year monthly returns regressed against S&P500 + five-year monthly returns regressed on NASDAQ; in part (d) a published beta from a reliable source.

Reference no: EM131893350

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