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A B C D E F G H I
1 Worksheet for Chapter 2 BOC Questions 3/17/2017
2
3 We use BOC Question 2-6 to illustrate some points about the CAPM, the SML, and Excel. For additional
456 information on Excel, see the Tool Kit for Chapter 2.
7
8 Rate of Return Calculat
9 The following returns were earned on the market and on Stocks X and Y during the last 5 years: For the Market:
10 Ending
11 Percentage Returns Beta Graph, Years 1-5 Only Price
12 Year Market Stock X Stock Y 40% $100.00
13 1 20% 16% 28% 30% X $118.00
66 Y
67
10%
68
69
70 -10%
71
72 -30%
73 -10% 0% 10% 20% 30% 40%
74 Market Return (%)
75
76
77 Beta Graph, Years 2-6
78
79
40%
80 20%
81 0%
82
83
-20%
84 -40%
85 -60% X
20% Y
10%
0%
-10%
-20%
-30%
-10% 0% 10% 20% 30% 40%
Market Return (%)
40%
20%
0%
-10% -20% 0% 10% 20% 30%
-40% X
-60% Y
-80%
Language: English