Details of this Paper

Please compute an intercept and beta estimate for Canadian Natural Resources Ltd.




1. Please compute an intercept and beta estimate for Canadian Natural Resources Ltd. by running;a regression using the Data Analysis tool in MS Excel for the period 2009-2013 (if you are a;Mac user, you can download StatPlus in order to find the regression tool). Are your intercept and;beta estimates statistically significant (note that standard levels of statistical significance are 1%;5%, or 10%)? What does the intercept value tell you about Canadian Natural Resource Ltd.s;stock over the sample period? Please submit your data and regression output.;Below are some instructions to help you get started;- Go the business library online (;- Under Search Collections go to Databases by Subject Name and search for the TSX (Toronto;Stock Exchange). Use your UCID to log in.;- Go to the 2014 edition (data ending Dec. 2013) and to the Monthly Stock Tables;- Search for the company ticker symbol (common shares) under Search CFMRC/TSX and add;the code to the query.;- Download the monthly stock returns, the monthly CFMRC Value Weighted Index returns, and;the 30-day return on T-Bills for the period 2009-2013.;- Use the excess returns market model when you are estimating your regression parameters, i.e.;Ri,t Rf = + (RM,t Rf) + i,t;2. Assume a firms debt is risk-free, so that the cost of debt equals the risk-free rate, Rf. Define;A as the firms asset beta (i.e. the systematic risk of the firms assets), and define E as the beta;of the firms equity. Use the CAPM along with M&M Proposition II to show that E = E;(1+D/E), where D/E is the debt-equity ratio. Assume the tax rate is zero.;3. In 1985, General Motors was evaluating the acquisition of Hughes Aircraft Corporation, and;assumed that Hughes was of approximately the same risk as Lockheed and Northrop. Given the;following information in the table, and also assuming that cash flows are perpetual, compute the;value of Hughes using the WACC approach


Paper#25841 | Written in 18-Jul-2015

Price : $27