Question
SP 500 share price St. Dev Home Depot Inc. Share price St. Dev Jan.14 1,845.86 76.67 82.11 4.77 Feb.14 1,782.68 46.45 76.64 3.92 Mar.14 1,857.68
SP 500share price | St. Dev | Home Depot Inc. Share price | St. Dev | |
Jan.14 | 1,845.86 | 76.67 | 82.11 | 4.77 |
Feb.14 | 1,782.68 | 46.45 | 76.64 | 3.92 |
Mar.14 | 1,857.68 | 58.04 | 80.73 | 3.98 |
Apr.14 | 1,884.39 | 57.36 | 79.51 | 4.19 |
May.14 | 1,923.87 | 47.40 | 80.25 | 3.75 |
Jun.14 | 1,962.29 | 63.20 | 81.32 | 3.31 |
Jul.14 | 1,929.80 | 96.83 | 80.56 | 3.37 |
Aug.14 | 2,004.07 | 68.84 | 93.04 | 2.92 |
Sep.14 | 1,971.44 | 49.25 | 92.14 | 9.65 |
Oct.14 | 2,018.21 | 60.58 | 96.81 | 11.21 |
Nov.14 | 2031.92 | 82.01 | 97.65 | 8.45 |
Dec.14 | 2,065.78 | 109.28 | 99.49 | 6.91 |
Jan.15 | 2,058.90 | 120.86 | 105.16 | 8.02 |
Feb.15 | 1,996.67 | 52.82 | 104.78 | 6.52 |
Mar.15 | 2,105.23 | 69.00 | 113.88 | 9.91 |
Apr.15 | 2,087.38 | 66.85 | 106.98 | 9.05 |
May.15 | 2,108.64 | 45.53 | 111.97 | 4.36 |
Jun.15 | 2,067.00 | 46.83 | 112.45 | 4.02 |
Jul.15 | 2,104.49 | 31.37 | 117.62 | 2.83 |
Aug.15 | 1,970.09 | 35.52 | 113.99 | 3.90 |
Sep.15 | 1,919.65 | 126.25 | 116.23 | 4.99 |
Oct.15 | 2,080.76 | 137.94 | 124.24 | 4.43 |
Nov.15 | 2099.20 | 123.46 | 125.98 | 7.39 |
Dec.15 | 2,082.93 | 115.42 | 133.52 | 12.85 |
- Plot the holding period returns from the Company against the SP500 Index
b. From the graphs in part b) describe the nature of the correlation between the stock returns of The Company and the returns for the SP500 index.
c. Obtain from Standard and Poor or alternative source such as Yahoo Finance, https://finance.yahoo.com/quote/HD/key-statistics/ the beta of The Company.
d. Assume that the Treasury bill rate is 2% and that the expected market return is 6%. In consideration of the betas for The Company, estimate an appropriate rate of return, using CAPM, for the Company
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started