Waite First Securities

9 Pages Posted: 21 Oct 2008

See all articles by Samuel E. Bodily

Samuel E. Bodily

University of Virginia - Darden School of Business


An account executive has the task of calculating a beta value for three stocks of interest to an important client, based on five years of monthly total returns. The client is interested in these beta values as measures of the riskiness of the three investments. This case is best used near the beginning of a module on regression. It focuses on the simple linear regression model relating equity returns to market returns. This use of regression (to calculate a stock's beta) is very common in financial analyses and will be seen by the students in other courses. The case serves to clarify the distinction between systematic and unsystematic risk and between R-squared and the standard deviation of residuals as measures of forecasting uncertainty.



Rev. Mar. 25, 2014


Harold Gagnon, one of Waite First's most important customers, was on the line to Brenda Hagerty, a Waite First account representative. “Happy New Year, Brenda. Listen, good news this early in the year. Our firm did very well last year, and I just learned that my year-end bonus gives me $ 30,000. I want to use that money to buy a stock to add to my portfolio.”

“Well, I believe there are still some good bargains in the market, Harold. I'm glad to hear you had a good year, but I think the good times for the market are still to come. I can recommend several promising stocks.”

“You may want to suggest others later, but right now I need you to give me some advice about three stocks I have been following recently: Apple Computer, Intel Corporation, and Safeway.”

. . .

Keywords: portfolio management, regression analysis, risk analysis, security analysis, statistics, female protagonist

Suggested Citation

Bodily, Samuel E., Waite First Securities. Darden Case No. UVA-QA-0453. Available at SSRN: https://ssrn.com/abstract=911985

Samuel E. Bodily (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4813 (Phone)
434-293-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/bodily.htm

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