2-49SE

a.

Follow the instructions to compute a frequency and percent frequency distribution of

betas for Dow Jones industrial average companies, using Excel.
1. Open data file.
2. Select any cell (A1:A31).
3. Click Insert on the Ribbon.
4. In the Tables group, click PivotTable.
5. When the Create PivotTable dialog box appears;
Click OK; a PivotTable and PivotTable Fields dialog box appear in a new
work sheet.
6. In the PivotTable Fields dialog box;
Drag Beta to the Rows area.
Drag Companies to the Values area.
7. Click Value Filed Settings from the list of options that appears.
8. When the Value Field Settings dialog box appears;
Under Summarize value field by, choose Count
Click OK.
9. Right click A4 in the Pivot Table. Choose Group from the list of options that
appears
When the Grouping dialog box appears;
Enter 0.04 in the Starting box.
Enter 1.84 in the Ending at box
Enter 0.5 in the By box. Click OK. A new sheet displays the frequency
distribution of median income.

10. For relative frequency (frequency/grand total), type =B4/B8 (for row B) and copy
the formula till row 7.
11. For percent frequency (relative frequency*100), type =C4*100 (for row B) and
copy the formula till row 7. The screen shot is as follows:

Figure 2a-49SE Frequency and percent frequency distribution of betas for Dow
Jones for industrial average companies.

b.

Follow the instructions in Excel to draw a histogram.

1. Select any cell in the Pivot table report (cells A4:A31).
2. Click Insert in the Ribbon.
3. In the Charts group click Recommended Charts; a preview showing the
recommended charts appears. Click OK.
4. Right click any bar in the charts and choose Format Data Series.
5. In the Format Data Series dialog box, set the Gap width to 0. Click the close
button.
6. Type Histogram for betas for Dow Jones in the chart title, Betas for Dow Jones in
the vertical axis title and Frequency in horizontal axis title. The screen shot is as
follows:

Figure 2b-49SE histogram of betas for Dow Jones.

Figure 2b-49SE shows the histogram of betas for Dow Jones. The x axis display the Betas
for Dow Jones and y axis display the frequency.

c.

Figure 2b-49SE shows that the right tail of the distribution is far extended than left tail.
This implies that the distribution of betas for Dow Jones industrial average companies is
right skewed.

d.

The data file shows that the highest beta is 1.84. The stock corresponding to highest beta
income is JPMorgan Chase & Co. Therefore, JPMorgan Chase & Co has the highest beta.
The data file shows that the lowest beta is 0.04. The stock corresponding to lowest beta is
Verizon Communication Inc. Therefore, Verizon Communication Inc has the lowest beta.