Cyberproblem

Portfolio Risk and Return - Yahoo!Finance

The tendency of a stock's price to move up and down with the market is reflected in its beta coefficient. Therefore, beta is a measure of an investment's market risk, and is a key element of the CAPM.

In this exercise you will find betas using Yahoo!Finance, located at http://finance.yahoo.com. To find a company's beta, enter the desired stock symbol and request a basic quote. Once you have the basic quote, select the "Profile" option in the "More Info" section of the basic quote screen. Scroll down this page to find the stock's beta.

1. Identify the beta listed for a company called ELXSI, stock symbol ELXS. According to Yahoo!Finance, what is ELXI's beta?
   
   
2. Again from Yahoo!Finance obtain a report on MBNA Corporation, symbol KRB. What is the beta listed for KRB?
   
   
3. Obtain and view a report for General Electric Corporation and identify its beta estimate. Use Yahoo!Finance's look-up feature to obtain the trading symbol.
   
   
4. Obtain and view a report on Ford Motor Company, and identify its beta estimate. Use Yahoo!Finance's look-up feature to obtain the trading symbol.
   
   
5. If you made an equal dollar investment in each of the four stocks, ELXSI, MBNA, Exxon, and Ford Motor Company, what would be the beta of your portfolio?
   
   
6. Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate the required return on General Electric stock and compare the required return against the return over the last 52 weeks, found in the Yahoo!Finance Profile. Assumptions and Data: Note that you will need an estimate of the risk-free rate, k_RF, the market risk premium. Assume a 7% market risk premium and get the current yield on 10-year Treasury securities from http://www.bloomberg.com. Select the "U.S. Treasuries" link from Bloomberg's navigation menu. Use the 10-year yield on Treasury securities as the risk-free rate.