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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.
Open a new spreadsheet in Microsoft Excel.
Type your historical bond data into column A, beginning in cell "A1" and then descending down the column.
Type your Dow Jones data into column B, beginning in cell "B1" and then descending down the column.
Type the following formula into cell "C1" to calculate the percent change: "=((B1-A1)/A1)*100".
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.
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
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