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Consider the Following Data for Dodger Corp A What Is Your Estimate of Beta for Dodger Corp

Question 40

Essay

Consider the following data for Dodger Corp.and the S&P 500:
 Year  Dodger Corp. Price  S&P 500 Level 197940.00150.00198036.00150.00198134.20145.50198220.52160.05198322.57163.2519822.34159.99\begin{array}{|c|c|c|}\hline \text { Year } & \text { Dodger Corp. Price } & \text { S\&P } 500 \text { Level } \\\hline {1979} & 40.00 & 150.00 \\\hline 1980 & 36.00 & 150.00 \\\hline 1981 & 34.20 & 145.50 \\\hline 1982 & 20.52 & 160.05 \\\hline 1983 & 22.57 & 163.25 \\\hline 198 & 22.34 & 159.99 \\\hline\end{array}

a. What is your estimate of beta for Dodger Corp.?
b. What portion of the firm's total variance is systematic, and what portion is unsystematic?
c. What is the required rate of return for Dodger Corp. if the riskless rate is 7% and the market risk premium is 8%?

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