0
You'll need a spreadsheet like Excel. Do the following.
1) Get percentage daily returns for the stock between two dates (I suggest every day for a year). You can get this historical data from Yahoo Finance
2) Pick a benchmark index
3) Get percentage daily returns for the index between the two dates as well
4) Calculate the covariance of the stock with respect to the index and divide by the variance of the stock [the two excel functions you'll need are covariance.p() and variance.p() ]
Go to the related link below for a spreadsheet to do this.
What else can I help you with?
Why is beta the correct measure of a stock riskiness?
Beta measures a stock's volatility (the swings up and down in price). The market as a whole has a beta of 1.0, but each stock is determined a beta value from a history of it's stock movements. Riskiness equates to the stock losing value and high beta stocks are more prone to falling faster.
If the risk-free rate is .06 and expected return on the market is .13. What is the requred rate of return on a stock that has a beta of 7?
49%....in reality no stock has a beta of 7
How do you calculate beta of the stocks with example?
Beta is calculated by comparing the returns of a stock to the returns of a benchmark index, typically the S&P 500. The formula for beta is: [ \beta = \frac{\text{Covariance}(\text{Stock Returns}, \text{Market Returns})}{\text{Variance}(\text{Market Returns})} ] For example, if a stock has a covariance with the market of 0.02 and the variance of the market returns is 0.01, the beta would be calculated as 0.02 / 0.01 = 2. This indicates that the stock is twice as volatile as the market.
Stock A has a beta equals 0.8 while stock B has a beta equals 1.6 Which one what statements is correct?
beta is a useless metric. It measures volalotilty. Which a serious investor won’t care about because it just gives them the price to buy more at a cheaper price and a investor knows the instricic value of a stock.
If a stock has a beta of 1.2 what does that mean?
If market rises by 100% then the stock rises by 120%
Why is beta the correct measure of a stock riskiness?
Beta measures a stock's volatility (the swings up and down in price). The market as a whole has a beta of 1.0, but each stock is determined a beta value from a history of it's stock movements. Riskiness equates to the stock losing value and high beta stocks are more prone to falling faster.
When working with the CAPM which of the following factors can be determined with the most precision?
the beta coefficient, b of a relatively safe stock
Is the beta of a stock static or dynamic?
The Beta of a stock is always dynamic.
In the context of the Capital Asset Pricing Model how would you define beta How are beta determined and where can they be obtained What are the limitations of beta?
In the context of the Capital Asset Pricing Model how would you define beta? How are beta determined and where can they be obtained? What are the limitations of beta?
How can I calculate the portfolio beta by weighting individual stock's betas?
To calculate the portfolio beta by weighting individual stock's betas, you would multiply each stock's beta by its weight in the portfolio, and then sum up these values to get the overall portfolio beta.
How can you measure volatility using beta?
You can use Beta to measure market volatility because of beta is the elasticity of a stock change as a result of a change in the market. That is, Beta of a sotck is found by comparing the senstivity of a stock's return to the fluctuations in the market.Beta is found by dividing the product of the covwariances of the stock and market retun by the variance of the market.The bench marks of betas are as followed:a risk free investment such as a Tbill (that is guaranteed a return) will have a beta of 0.A portfolio with risk equivalent to the market has a beta of 1.Given those two bench mark, you can gauge at the volatility of the stock/investment by comparing its beta with those two extremes.
What would make a firm's beta increase?
The beta of a firm's stock is dependent on the volatility of the stock relative to the overall market. So if the stock's volatility increased relative to the overall market, it's beta would increase as well.
Where and how do you get beta values for Indian companies?
Look up Bombay Stock Exchange www.bseindia.com and Nantional Stock Exchange www.nseindia.com for beta values of Indian companies.
If a stock has a beta equal to one?
A beta of 1 indicates that the security's price will move with the market.
What does BETA indicate?
Beta is a measure of a stock's volatility. The price of a stock with a beta of 1.0 rises and falls on average with the overall market. A beta greater than 1.0 could mean larger prices fluctuations, and a beta of less than 1.0 indicates a more tame stock. For example, if Company A has a beta of 1.2 and the market goes up 10% in a given period of time then Company A should increase about 12% in value. If the market falls 20% then Company A's stock price should drop 24%.
If the risk-free rate is .06 and expected return on the market is .13. What is the requred rate of return on a stock that has a beta of 7?
49%....in reality no stock has a beta of 7
What is a BETA number?
In finance, a beta number measures the volatility or risk of a stock relative to the overall market. A beta greater than 1 indicates that the stock is more volatile than the market, while a beta less than 1 suggests the stock is less volatile. It helps investors assess the potential risk and return of a particular investment.
