Question One:
Below are the median market return and median stock
Median Return for S&P 500 and Apple by
S&P 500 Return Tercile


Tercile

Median Market Return

Median Apple Return

1

0.0061

0.0034

2

0.0124

0.0147

3

0.0285

0.0569

Median monthly returns from 1980 to 2017. Data was sorted by smallest to largest
S&P 500 returns and placed into terciles by S&P 500 return.
Consider the market return variable to be your X
variable and the median Apple return to be your Y variable. Provide an equation of the form Y=mx+b with
the slope defined by the third and first quartile and with the line running
through (X,Y) of the second tercile.
Answer:
The slope of the line is 1.74 (0.0569 0.0034)/(0.0285 0.0061). The
line goes through (0.0124, 0.0147) Using these values for X and Y and
1.74 for m we solve for b.
b=0.01471.74*0.0124) or b=0.0070.
The equation is Y=0.0070+1.74*X.
Readers interested in using medianmedian
regression models to estimate betas of stocks can go to the following post.
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