Finance Paper

Its never easy to get ahead
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Dylan Pels,16-Dec-2012

According to the goodness/Bad Stock Portfolio, beta isnt a critical factor for high or low rates of expectant gain.
This is a fact because betas interpretation is as follows.
If beta is below zero one can secernate that the stock propels in the opposite direction as compared to the index, if it is on the thoton zero there is no correlation with the market. Moreover, when beta is lies betwixt zero and 1 the causal agent of the security is generally in the like direction, but less than the movement of the benchmark, if it is exactly one, undefiled correlation exists between the stock and the index. When beta exceeds one the movement of the security should be in the same direction as, but more than the movement of the index.

As can be interpret from the spreadsheet, the good stocks including: FB, BAC, BBY, DELL, CRM and ANF, all carry high betas (+1). However, the change in market value varied heavily between these stocks.
If the statements close to the interpretation of beta is true, how can it be that FB, BAC, ANF, DELL and CRMs percentage change were 20.25%, 16.79%, 25.79%,1.06% and 0.97% respectively when the index only declined by -3.09%. Shouldnt these stocks not only move in the same direction but exceed the index as well up?




The only good stock proving the beta statement objurgate is BBY. This stock declined by -32.68% exceeding the index decline significantly as its beta indicates.

The Bad stocks results, which include AAPL, GOOG, AMZN, T, CVX and NFLX, begettert contribute to the beta theory either. T, CVX and NFLX all arrive a beta between zero and one, so they should move in the same direction, but not as more than as the index. However, these 3 stocks percentage change are -11.40%, -9.18% and 48.78% respectively, this overly doesnt align with the beta theory.
On the other hand, the stocks AAPL, GOOG and AMZN do comply with the theory of beta. With betas of 1.21, 1.08 and 0.93,...If you want to get a overflowing essay, order it on our website: Orderessay



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