If the prof states Compute the market beta of the stock of Microsoft with respect to S&P500, is the excel function: Slope(Microsoft, S&P 500)

Finance Dec 27, 2020

If the prof states Compute the market beta of the stock of Microsoft with respect to S&P500, is the excel function: Slope(Microsoft, S&P 500). The first value in the function is on the y axis, the 2nd value on the x axis.

Expert Solution

You are right. You just have to make sure the below in your return computation for Microsoft and S&P500

excess returns of Microsoft=returns of Microsoft-risk free rate

excess returns of S&P500=returns of S&P500-risk free rate

Lets say you found the excess returns of Microsoft in Column A and excess returns of S&P500 in Column B

Beta will be =SLOPE(A,B)

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