Financial Technology Center - School of Business - Central Connecticut State University

Hanratty Inc.’s stock and the stock market have generated the

following returns over the past five years:

                  Year        Hanratty         Market (k_M)

                    1            13%                9%

                    2            18                   15

                    3            -5                    -2

                    4            23                   19

                    5             6                     12

On the basis of these historical returns,

what is the estimated beta of Hanratty Inc.’s stock?

Using the linear regression function in your calculator.
enter the market return and the corresponding stock return
Remember.
L1 list one should have the market returns.
L2 list two should have the stock returns.


find the slope of the predicted regression line.
Slope = Beta = 1.2757