Using the price data, estimate expected returns and standard deviation of returns of BOTH companies...
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Using the price data, estimate expected returns and standard deviation of returns of BOTH companies and SPY. Use the close prices to calculate returns. Return in any month for a security can be calculated as Close price of that month divided by close price of the previous month minus 1. For example, Returns in month i can be calculated as RWMT,i = (Close pricei / Close pricei-1) -1.
Following the market model regression, calculate beta for your companies. You need to regress your company returns on SPY returns to get company betas. Beta is the coefficient of the regression.
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