Chapter 4 The Value of Common Stocks

61. Briefly explain how "beta" of a stock is estimated. Answer: "Beta" of a stock can be estimated graphically by plotting the market returns on the x-axis and the corresponding stock returns on the y-axis. The slope of the resulting linear graph is the "beta" estimate for the stock. [ i = Cov(Ri, Rm )/Var(Rm )] Type: Medium. Page: 173. 62. ................
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