Question
Please answer the following questions for the company given is CGI:Information technology consulting . A- Calculate the average monthly stock market return on the company
Please answer the following questions for the company given is CGI:Information technology consulting.
A- Calculate the average monthly stock market return on the company over the past 5 years.
B- Determine the risk of the firm by measuring its beta.
C- Make a list of all the risks that your company is exposed to and classify those into market-risk, firm-risk, industry-risk, etc...
Please note that you have to use Yahoo Finance and your own research to find the information. Use financial statements if necessary.
Here is a suggested outline you can follow with your answer:
Risk and Return Analysis:
A- Risk Relative to the Market
Average annual return
Standard deviation
B- Cost of Equity
Regression Method Beta
Bottom Up Beta
C-Cost of Debt
After-Tax Cost of Debt = Pre-tax cost of debt * (1-Tc)
Pre-Tax Cost of Debt = Risk free rate + Default spread
Interest Coverage Ratio=
Earnings Before Interest and Taxes (EBIT)=
D-Weighted Average Cost of Capital
% of Equity = Book Value of Equity / (Book Value of Equity + Book Value of Debt)
% of Debt = Book Value of Debt / (Book Value of Equity + Book Value of Debt)
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