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Instructions For Calculating Beta

The document provides step-by-step instructions for calculating beta using historical price data from Yahoo Finance. It outlines the process of downloading daily data for an index and a company's stock, calculating daily returns, and using Excel functions to find covariance and variance. The final goal is to compute the beta value based on the returns of the index and the stock.

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mehnaz k
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27 views1 page

Instructions For Calculating Beta

The document provides step-by-step instructions for calculating beta using historical price data from Yahoo Finance. It outlines the process of downloading daily data for an index and a company's stock, calculating daily returns, and using Excel functions to find covariance and variance. The final goal is to compute the beta value based on the returns of the index and the stock.

Uploaded by

mehnaz k
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Instructions for calculating beta

1. Go to Yahoo Finance (or any website where historical price data for companies and index
level of corresponding index is available )

2. Download daily data for an index for 1 year.

If download option is available ,use that and it will automatically export data to excel,
otherwise copy and paste to excel .

3. daily returns for the index using formula:

=(Current level -level on previous day )/level on previous day

Drag the formula down in excel to copy the formula to find daily returns for 1 year

4. Download historical daily stock price data for a company for 1 year.

5. If download option is available ,use that and it will automatically export data to excel,
otherwise copy and paste to excel .

6. Find daily returns for the index using formula:

=(Current price - price on previous day )/price on previous day

7. Drag the formula down in excel to copy the formula to find daily returns for 1 year

Find the covariance of returns of index and returns on stock using the function in excel =COV

Find the Variance of market returns using the excel function =VAR

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