Beta Estimates

Go to http://finance.yahoo.com and click on the Investing link. This will open the Market Overview page. Click on the Stocks tab and then the Stock Screener link. Select the link for the Java Yahoo! Finance Screener that lets you create your own screens. In the Criteria box, scroll down to Trading and Volume on the menu and choose Beta. In the Conditions box, choose <= and in the Values box, enter 1. Hit the Enter key and then request the top 200 matches in the Return Top __ Matches box. Click on the Run Screen button.

Select the View Table tab and sort the results to show the lowest betas at the top of the list by clicking on the Beta column header. Which firms have the lowest betas? In which industries do they operate?

Select the View Histogram tab and when the histogram appears, look at the bottom of the screen to see the Show Histogram for box. Use the menu that comes up when you click on the down arrow to select beta. What pattern(s), if any, so you see in the distributions of betas for firms that have betas less than 1?

Comparing Volatilities and Beta Coefficients

Go to http://moneycentral.msn.com/investor/home.asp, which is the home page for the MSN investing website. Click on the link for Stocks, and then select Stock Screener on the menu on the left side of the screen. Choose Food – Major Diversified in the Industry box and choose S&P 500 in the S&P Index Membership box. Click on the Search button to get the results. For each of the resulting stocks, do the following:

• Click on the stock's symbol. This will bring up the Company Report for the firm. Scroll down until you see the Stock Activity section and find the beta (volatility) for the stock. Note what the beta is so you will have a basis for comparisons among the firms.
• Click on Charts on the left side menu of the Company Report. Click on the Customize Chart link at the right of the chart and specify a 5 year date range and a comparison to the S&P500. Does the chart seem consistent with the beta you found for the stock? If not, why might there be differences?
• What is the range of the betas you found for the firms? Why might firms in the same industry have different betas?
• Find the firms in the lodging industry group that are in the S&P 500 by following the same procedure as you did to find the food firms. How do their betas compare to those of the food firms? Do the firms in the industry that is more sensitive to the business cycle appear to have higher betas?