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Download 5 years of historical monthly (dividend-adjusted) prices for Coca-Cola (KO) and the S&P 500 from Yahoo! Finance.
(a) Compute the monthly rates of return.
(b) Compute the average rate of return and risk of portfolios that combine KO and the S&P 500 in the following proportions: (0.0, 1.0), (0.2, 0.8), (0.4, 0.6), (0.6, 0.4), (0.8, 0.2), (1.0, 0.0). Then plot them against one another. What does the plot look like?
(c) Compute the market beta of Coca-Cola.
A natural monopoly can charge a price above MC where MC = MR, because
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