A stock's beta coefficient can be calculated using the following equation:B₁=Oi, mσεma. Write a user-defined function that can calculate the beta coefficient. The argu-ments to the function should be the covariance between the stock and marketreturns, and the variance of the market's returns. For example, BETA (COVAR ASSINGLE, MARKET VAR AS SINGLE).b. Rewrite your function so that it accepts ranges of returns and then calcu-lates the beta directly from the returns. It should be defined as: BETA(STOCK-RETURNS AS RANGE, MARKETRETURNS AS RANGE). Your function should make useof Application. WorksheetFunction to calculate the covariance and variance(use Excel's COVAR.S and VAR.S functions). In the code, be sure to check tosee if the number of stock returns is equal to the number of market returns.The function should return an error if the count of returns is not equal.

Step 1: This function calculate_beta() now accepts two lists of returns: stock_returns and…

Answered: A stock's beta coefficient can be…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The variances of stocks A and B are 1 percentage square and 4 percentage square, respectively. If the covariance between the two stocks is 0.6 percentage square, what is the correlation? Dont
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