| Prepared by William Lim, University of New Brunswick. Note: To do the following interactive exercise, your university library must subscribe to FP Analyzer. Go to: http://www.fpdata.finpost.com/suite/ and click on “FP Corporate Analyzer”. Then login using the ID and Password for your university library. Alternatively, link to FP Corporate Analyzer from your university library’s home page. You may ask for directions from the reference librarian on how to access FP Corporate Analyzer (an e-reference source) from your university library’s home page. After you login, you will first come across a “search” screen. In the box for “Stock Ticker Symbol”, enter AC and then click on “Search”. You will get a corporate profile of Air Canada. On the first page, you should see a section on “Beta” under “Selected Ratios”. Note the beta for Air Canada in the past year (52 Weeks Beta), past three years (36 Months Beta), past five years (60 Months Beta) and past ten years (120 Months Beta). How has Air Canada’s beta changed from the past five/ten years to the past three years and past year? What does this tell you about the volatility of Air Canada’s stock recently (in the past three years)? What factors in the past three years could have contributed to Air Canada becoming more risky? How should this increased risk (higher beta) affect Air Canada’s required return, and ultimately the intrinsic value of its share price? What has happened to Air Canada’s share price in the past three years? | 
2003 McGraw-Hill Higher Education