| 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 Yahoo! Finance at the following address: http://finance.yahoo.com . In the box next to “enter symbol(s)” type nt.to and pull down the menu to the right to ask for chart. Then click on “Get”. When the chart appears for Nortel’s stock price, use the compare function by typing Ùtse in the box next to nt.to vs. and click on “compare”. This provides a comparison of the TSE 300 index and Nortel’s stock price changes over the past year. Would you expect Nortel to have a one-year beta less than or greater than one? Next, change the period from one to five years by clicking on “5y” in the menu above the chart. This provides a comparison of the TSE 300 index and Nortel’s stock price changes over the past 5 years. Would you expect Nortel to have a five-year beta less than or greater than one? Repeat the above exercise for Loblaws by returning to Yahoo! Finance home page and typing l.to in the box next to “enter symbol(s)”. Would you expect Loblaws to have one-year and five-year betas less than or greater than one? You can also compare Loblaw’s price changes with Nortel’s by entering nt.to instead of Ùtse in the box next to l.to vs. and clicking on “compare”. Which company clearly has a higher one-year beta (and also a higher five-year beta)? Now 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 NT and then click on “Search”. You will get a corporate profile of Nortel. On the first page, you should see a section on “Beta” under “Selected Ratios”. Note the one-year (52 weeks) and five-year (60 months) betas for Nortel. Are they consistent with your expectation from examining the charts at Yahoo! Finance? Next click on “Search” in the menu tab above and repeat the exercise for Loblaws by entering L in the box instead. Note the one-year (52 weeks) and five-year (60 months) betas for Loblaws. Are they consistent with your expectation from examining the charts at Yahoo! Finance? Finally, compare Nortel’s betas with Loblaw’s betas. Which company has higher betas, as expected? | 
2003 McGraw-Hill Higher Education