Data Analytics
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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