We will compute alpha and beta for Amazon, using the data in the Excel spreadsheet Amazon in HW5data2020. (3.1) Challenging. Using the data provided, compute the monthly rates of return on Amazon's stock. Note that Amazon does not pay dividends, so the monthly rates of return can be computed directly from the stock prices in consecutive months (column B in the spreadsheet). For example, the monthly rate of return on 1-Aug-20 is=(B2−B3)/B3. Enter this formula in cell F2. Complete the computations by copying this formula down column F. You should now have 119 monthly rates of return (from 1-Oct-10 to 1-Aug-20). In the next column, compute the monthly excess rates of return on Amazon's stock. Use the 10-year Treasury Bill given in column D as the yearly risk-free rate. Divide by 12 to get the monthly risk-free rate. Thus Amazon's excess rate of return on 1-Aug-20 is =F2-D2/12. Enter this in cell G2. Complete the computations by copying this formula down column G. Repeat the same steps for the market's rates of return. Use the SP500 as the market; the monthly values of this index are given in column C. In cell I2, write the formula=(C2−C3)/C33and copy the formula down column I; in cellJ2, write the formula =I2-D2/12 and copy it down column J. Run a linear regression where the independent variable is the market's excess rate of return and the dependent variable is Amazon's excess rate of return. What is the beta of Amazon? (3.2) Moderate. Provide a 95\% confidence interval for the beta of Amazon. Yahoo.finance claims that Amazon's beta is1.33. Test this hypothesis at the5%significance level.(3.3) Moderate. A prediction about the CAPM that will be developed in your finance class is that the interceptα=0for any asset. What value ofαdid you find in the regression performed in (3.1)? Test the hypothesis thatα=0at a5%significance level. Is the predictionα=0supported? (3.4) Moderate. Interpret the coefficient of determinationR2in terms of the systematic and diversifiable components of the risk.1-Nov-12 1-Oct-12 4-Sep-12 1-Aug-12 2-Jul-12 1-Jun-12 1-May-12 2-Apr-12 1-Mar-12 1-Feb-12 3-Jan-12 1-Dec-11 1-Nov-11 3-Oct-11 1-Sep-11 1-Aug-11 1-Jul-11 1-Jun-11 2-May-11 1-Apr-11 1-Mar-11 1-Feb-11 3-Jan-11 1-Dec-10 1-Nov-10 1-Oct-10 1-Sep-10 252.05232.89254.32248.27233.3228.35212.91231.9202.51179.69194.44173.1192.29213.51216.23215.23222.52204.49196.69195.81180.13173.29169.64180175.4165.23157.061,416.181,412.161,440.671,406.581,379.321,362.161,310.331,397.911,408.471,365.681,312.411,257.601,246.961,253.301,131.421,218.891,292.281,320.641,345.201,363.611,325.831,327.221,286.121,257.641,180.551,183.261,141.201.65%1.75%1.72%1.68%1.53%1.63%1.80%2.05%2.18%1.97%1.97%1.97%2.01%2.15%1.97%2.28%2.99%3.00%3.17%3.45%3.41%3.58%3.39%3.31%2.77%2.54%2.65%