Chapter 6: Web Safari Finding Beta

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Chapter 6: Web Safari

Finding Beta

Question: What is the value of Beta for Dell? Are there different values of Beta for Dell available on the Internet? If so, why are there different values?

If you have an Internet connection, you can use the following directions to find Dell’s current situation. Otherwise, you can use the information in this file to answer the questions above.

Go to http://finance.yahoo.com and you will get this screen. You may enter the ticker symbol for a company, such as Dell, in the field next to the Get Quotes button (note: if you don’t know the ticker symbol, you can use their link to Symbol Lookup, shown above the Get Quotes button). Click on Get Quotes after you have entered your company.

After clicking on Get Quotes, you will come to this screen. In addition to showing the most recent stock price, this screen gives you several options. This screen allows you to get more detailed information about Dell. You will want to click on Profile in the More Info section (shown by the hand icon).

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Brigham & Ehrhardt, Financial Management Page 3

After clicking on Profile, you will come to this screen. Scroll down the page until you get to the part of the screen shown by the second image. The Beta for Dell is shown in the Price and Volume statistics (shown by the pointer). Yahoo! actually receives this Beta value from

Marketguide, as do many other websites.

Beta Source 2

For an alternate source of Beta, go to http://www.bloomberg.com and you will get this screen. You may enter the ticker symbol for a company, such as Dell, in the field under Stock Quotes at the top of the page (note: if you don’t know the ticker symbol, you can use their link to Look up symbol). After entering the ticker symbol, you will click on the Go button (shown with the hand icon).

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After clicking on the Go button, you will get this screen. Scroll down the page until you get to the part of the screen shown by the second image. The Beta for Dell is given in the Fundamentals section (shown by the pointer). Notice that this Beta is different than the one from Yahoo!

Beta Source 3

For an alternative source of Beta, go to http://www.wsrn.com and you will get this screen. You may enter the ticker symbol for a company, such as Dell, in the field by Ticker Symbol at the top of the page (note: if you don’t know the ticker symbol, you can use their link to Ticker Lookup). After entering the ticker symbol, you will click on the Go button (shown with the pointer).

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After clicking on the Go button, and you will get this screen. You will need to click on the link QuickSource: Description & Stats (shown with the hand icon).

After clicking on the link QuickSource: Description & Stats, you will come to this screen. You will need to scroll down the page until you see Beta under the Stock Price Data on the second image (next to the pointer). You will notice that this Beta is different from either Yahoo! or Bloomberg.

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Why are the values for Beta different?

You have noticed that Yahoo!, Bloomberg, and Wall Street Research Net all have different values of Beta for Dell. How is this possible for such a difference to exist? The answer lies in how the various sites calculate Beta.

Bloomberg Beta:

Bloomberg calculates beta using 36-60 months of returns (it doesn’t say whether it includes dividends when calculating returns). It uses the S&P 500 as the market index.

Yahoo! (MarketGuide) Beta

The Market Guide Beta uses 60 months of returns, defined the

percentage price change (it ignores dividends when calculating returns). It uses the S&P 500 as the market index. Beta values are not calculated if less than 24 months of pricing is available.

WSRN Beta

The 60-Month Beta uses total returns (which includes dividends) the 36-Month Beta uses percentage price changes (it ignores dividends). It uses the S&P 500 as the market index. A minimum of 12 monthly returns is required for this calculation.

Despite the similarity in the way that these sources calculate beta, the resulting estimates are often quite different, possibly due to how frequently they update their estimates.