Consider the Following Data for Dodger CorpA What Is Your Estimate of Beta for Dodger Corp

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R _ { i }

=\frac{ ext { Ending value }- ext { Beginning value }}{ ext { Beginning Value }}

R _ { M } = \frac { Y _ { M } } { P _ { M } } - 1

R i = \frac { Y _ { i } } { P _ { i } } - 1

A and the return on market =
a.
$R _ { i }=\frac{ ext { Ending value }- ext { Beginning value }}{ ext { Beginning Value }} R _ { M } = \frac { Y _ { M } } { P _ { M } } - 1 R i = \frac { Y _ { i } } { P _ { i } } - 1 A and the return on market = a. a.The estimated Beta of the firm is equal to covariance (stock and market)÷ market variance.Hence,the Beta is = -2.78534. b.To find the value of the firm's systematic and unsystematic variance,we use the following equation: \sigma _ { i } ^ { 2 } = \beta _ { i } ^ { 2 } \sigma _ { m } ^ { 2 } + \sigma _ { e i } ^ { 2 } \beta _ { i } ^ { 2 } \sigma _ { m } ^ { 2 } = ( - 2.78534 ) ^ { 2 } imes 0.26795 = 2.07875 As 2.07875% is the systematic variance,the unsystematic variance can be found by the following equation: \sigma _ { e i } ^ { 2 } = \sigma _ { i } ^ { 2 } - \beta _ { i } ^ { 2 } \sigma _ { m } ^ { 2 } \sigma _ { e i } ^ { 2 } = 3.50528 - 2.07875 = 1.42653 c.The expected rate of return on Dodger's stock is: \bar { R } i = R _ { F } + \beta i \left( \bar { R } _ { M } - R _ { F } ight) =7% + -2.78534(8%) =-15.28%$ a.The estimated Beta of the firm is equal to covariance (stock and market)÷ market variance.Hence,the Beta is = -2.78534.
b.To find the value of the firm's systematic and unsystematic variance,we use the following equation:

\sigma _ { i } ^ { 2 } = \beta _ { i } ^ { 2 } \sigma _ { m } ^ { 2 } + \sigma _ { e i } ^ { 2 }

\beta _ { i } ^ { 2 } \sigma _ { m } ^ { 2 } = ( - 2.78534 ) ^ { 2 } imes 0.26795 = 2.07875

As 2.07875% is the systematic variance,the unsystematic variance can be found by the following equation:

\sigma _ { e i } ^ { 2 } = \sigma _ { i } ^ { 2 } - \beta _ { i } ^ { 2 } \sigma _ { m } ^ { 2 }

\sigma _ { e i } ^ { 2 } = 3.50528 - 2.07875 = 1.42653

c.The expected rate of return on Dodger's stock is:

\bar { R } i = R _ { F } + \beta i \left( \bar { R } _ { M } - R _ { F } ight)

=7% + -2.78534(8%)
=-15.28%

Consider the Following Data for Dodger Corp A What Is Your Estimate of Beta for Dodger Corp

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