Out staff of freelance writers includes over 120 experts proficient in Illustration of Method Used to Calculate Beta, therefore you can rest assured that your assignment will be handled by only top rated specialists. Order your Illustration of Method Used to Calculate Beta paper at affordable prices with Live Paper Help!
Beta is an asset’s volatility relative to “the market.” An asset with a beta coefficient of 1.0
has tended to experience up and down movements of roughly the same magnitude as
the market. One with a beta of 1. has tended to gain roughly 0% more than the market
during rising periods, and has tended to experience declines 0% more severe than the
Write my Essay on Illustration of Method Used to Calculate Beta for me
market during periods of falling prices. The name “beta” refers to the “b” (the “slope”) in
the linear equation Y= a + bX.
CALCULATION METHODOLOGY
This method compares an asset’s volatility relative to “the market.” A formula is designed
to create a loglog regression of an asset. This is accomplished by using “log price
relatives” (the natural logarithms of the price relatives).
Factual Data
Time
Period “Market” % Fund %
1 0 0
0 40
40 40
4 0 0
5 10 50
Step 1 Determine the Price Relative of each time period for both “the market” and the
fund using the following formula
Fund or Market Return/100 + 1 = Price Relative
Example
0/100 + 1 = 1. 0/100 + 1 = 1.0
0/100 + 1 = 1.0 40/100 + 1 = 0.6
40/100 + 1 = 1.4 40/100 + 1 = 1.4
0/100 + 1 = 1. 0/100 + 1 = 1.
10/100 + 1 = 0. 50/100 + 1 = 0.5
Step After you calculate the Price Relatives for all the time periods, you must convert
each value using “Log Price Relatives” (the natural logarithms of the price relatives). Do
this by using a financial calculator or a spreadsheet program with formulas.
Example From the previous example use the calculated price relatives to determine the
“Log Price Relatives”. Add the figures for each to calculate Sigma X and Sigma Y.
“ Market” (X) Fund (Y)
1. = 0.18 1.0 = 0.00000
1.0 = 0.00000 0.6 = 0.5108
1.4 = 0.647 1.4 = 0.647
1. = 0.66 1. = 0.66
0. = 0.1056 0.5 = 0.615
Sigma X = 0.67580 0.60514 = Sigma Y
Step Multiply each log price relative against each other and then add the total together
to get Sigma XY.
LANA Client Services
Calculation Methodologies
Contact Us (877) 55477
Example
XY
0.08 0.00000 = 0.00000
0.00000 0.5108 = 0.00000
0.647 0.647 = 0.111
0.66 0.66 = 0.06884
0.1.056 0.615 = 0.070
Sigma XY = 0.5508
Step 4 Square both X and Y to calculate Sigma X squared and Sigma Y squared.
Example
0.18 0.18 = 0.04 0.00000 0.00000 = 0.00000
0.00000 0.00000 = 0.00000 0.5108 0.5180 = 0.604
0.647 0.647 = 0.111 0.647 0.647 = 0.111
0.66 0.66 = 0.06884 0.66 0.66 = 0.06884
0.1056 0.1056 = 0.0110 0.615 0.615 = 0.48045
Sigma X = 0.6 Sigma Y = 0.44
Step 5 Calculate “beta” using the following formula
Beta Coefficient =
n xy x y
n x x


å å å
å å ( )
Example
5 0.5508  .67580 (.60514)
Beta =
5 .6  .67580 = .4445
Please note that this sample paper on Illustration of Method Used to Calculate Beta is for your review only. In order to eliminate any of the plagiarism issues, it is highly recommended that you do not use it for you own writing purposes. In case you experience difficulties with writing a well structured and accurately composed paper on Illustration of Method Used to Calculate Beta, we are here to assist you. Your cheap custom college paper on Illustration of Method Used to Calculate Beta will be written from scratch, so you do not have to worry about its originality.
Order your authentic assignment from Live Paper Help and you will be amazed at how easy it is to complete a quality custom paper within the shortest time possible!
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.