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Discussion Beta.edited

Content type
User Generated
Subject
Management
School
Cumberland University
Type
Homework
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Running head: DISCUSSION 1
Discussion
Name
Institutional Affiliation

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DISCUSSION 2
The yearly data utilized in calculating the Beta are gathered from a time period of 5 years. The
frequency we have is monthly.
The first thing we need to calculate is the actual return on a given security and then get the value
of the market return. The Beta for my chosen company is calculated as below:
The Return = The Current Adjacent close less the Previous Adjacent Close - 1
The Previous Adj Close
Beta = Covariance
Variance
In this case, covariance is the measure of the return of a stock relative to the market return
While Variance is the actual measure of the movement of the market relative to its
actual mean
The Beta for Pepsi-co is 0.54
2. The industry that the company I selected operates in is for soft drinks. I identified the
following listed companies which are similar to PepsiCo. Since they all operate in the same
industry.
Company
Name
Beta
Consumer Stables
0.55
Primo Water Corporation
0.56

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Running head: DISCUSSION 1 Discussion Name Institutional Affiliation DISCUSSION 2 The yearly data utilized in calculating the Beta are gathered from a time period of 5 years. The frequency we have is monthly. The first thing we need to calculate is the actual return on a given security and then get the value of the market return. The Beta for my chosen company is calculated as below: The Return = The Current Adjacent close less the Previous Adjacent Close - 1 The Previous Adj Close Beta = Covariance Variance In this case, covariance is the measure of the return of a stock relative to the market return While Variance is the actual measure of the movement of the market relative to its actual mean The Beta for Pepsi-co is 0.54 2. The industry that the company I selected operates in is for soft drinks. I identified the following listed companies which are similar to PepsiCo. Since they all operate in the same industry. Company Name Beta Consumer Stables 0.55 Primo Water Corporation 0.56 DISCUSSION 3 Constellation Brands Inc. 0.77 Coca-Cola Consolidated, Inc. 0.98 3. Beta refers to a coefficient of risk that is systematic in nature or particular volatility of investment security in the market which is unsystematic. It typically measures the risk of return of a particular investment from the overall market. It is also essential in the Capital Asset Pricing Model. The actual value of Beta indicates the degree of the potential risk Therefore if a company portrays ...
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