Using the following information: MARKET STOCK Z 2018 2.4580 1.9854 CALCULATE: Beta (slope) Alpha (intercept) CORR (correlation) 2019 1.5110 0.9822 2020 0.5789 1.0559 2021 2.2486 2.2590 2022 1.1589 0.9995 R^2 (Goodness of Fit) ANSWER QUESTION: How much of the return on STOCK Z is explained by the return on the MARKET?
Using the following information: MARKET STOCK Z 2018 2.4580 1.9854 CALCULATE: Beta (slope) Alpha (intercept) CORR (correlation) 2019 1.5110 0.9822 2020 0.5789 1.0559 2021 2.2486 2.2590 2022 1.1589 0.9995 R^2 (Goodness of Fit) ANSWER QUESTION: How much of the return on STOCK Z is explained by the return on the MARKET?
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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Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Question
Ee 404.
Transcribed Image Text:Using the following information:
MARKET
2018
2.4580
2019
1.9854
1.5110
2020
0.9822
0.5789
1.0559
2021
STOCK Z
CALCULATE:
Beta (slope)
Alpha (intercept)
CORR (correlation)
R^2 (Goodness of Fit)
ANSWER QUESTION:
How much of the return on STOCK Z is explained by the return on the MARKET?
2022
2.2486 1.1589
2.2590
0.9995
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