The Log-Price Spread Formula

A spread value is −0.02. Roughly what does it say?

• A is $0.02 cheaper than B
• A is about 2% cheap relative to β-weighted B
• A is 2% rich relative to B

Why is it wrong to apply a β fitted on natural logs to base-10 logs?

• It isn't; the log base doesn't matter for a ratio
• β and μ were fitted on natural logs, so on another scale they give a different, meaningless number
• Base-10 logs are only a problem when prices are below 10