Data Analytics 19528753


The file Delldata.xlsx (available on the companion website) contains

monthly returns for the Standard & Poor’s stock index and for Dell stock.

The beta of a stock is defi ned as the slope of the least-squares line used to

predict the monthly return for a stock from the monthly return for the market.

Use this fi le to perform the following exercises:

a. Estimate the beta of Dell.

b. Interpret the meaning of Dell’s beta.

c. If you believe a recession is coming, would you rather invest in a highbeta

or low-beta stock?

d. During a month in which the market goes up 5 percent, you are 95

percent sure that Dell’s stock price will increase between which range

of values?

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