How to Calculate the Beta of a Bond

by Stephanie Ellen

The beta of a bond represents how the bond's returns relate to the returns of the financial market in general. Beta for any particular bond is calculated using the slope function. However, because a large amount of historical data is needed to effectively calculate a bond's beta, calculating by hand is time consuming and prone to errors. Use Microsoft Excel to make a fast and accurate slope calculation.

Step 1

Open a new spreadsheet in Microsoft Excel.

Step 2

Type your historical bond data into column A, beginning in cell "A1" and then descending down the column.

Step 3

Type your Dow Jones data into column B, beginning in cell "B1" and then descending down the column.

Step 4

Type the following formula into cell "C1" to calculate the percent change: "=((B1-A1)/A1)*100".

Step 5

Drag the fill handle down column C to the end of your data. The fill handle will appear as a little black square when you click on a cell. Dragging the fill handle populates each cell in the column with the same formula.

Step 6

Type the following formula into any blank cell: "=SLOPE(ColumnA1:ColumnA365,ColumnB1:ColumnB365)". This formula calculates the slope of the line, which is equivalent to the stock's beta.

Items you will need

  • 365 days of historical pricing data for the bond
  • 365 days of historical pricing data for the Dow Jones
  • Microsoft Excel

Photo Credits

  • John Foxx/Stockbyte/Getty Images