Use yahoo finance to find information for the common stock of Johnson & Johnson. Its ticker symbol is JNJ. Johnson & Johnson is an American multinational corporation. Founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. Its common stock is a component of the Dow Jones Industrial Average and the company is ranked No. 37 on the 2018 Fortune 500 list of the largest United States corporations by total revenue. Johnson & Johnson is one of the world's most valuable companies, and is one of only two U.S.-based companies that has a prime credit rating of AAA, higher than that of the United States government.

Q1. On which exchange is the stock traded?

Q2. How big is the company? If you bought all of the shares at the last price, how much would it cost? That is also known as market capitalization. NO ABBREVIATIONS.

Q3. If you owned one share of stock for one year, how much would you receive in cash dividends?

Q4. What were JNJs Earnings Per Share [EPS] for the last twelve months [TTM]?

Q5: What was JNJ 's Price/Earnings Ratio on 12/31/2020?

Q6. What was the price of the stock 5 years ago?

Q7. If you bought JNJ 5 years ago at this price, and sold it today, how much did you earn per year, compounded annually? [This is similar to the average annual return calculation that we did for the Fidelity mutual funds].

SHOW WORK ... NO WORK ... NO POINTS.

Q8. What is JNJ 's beta?

Q9. Does JNJ have more systematic risk than the S&P500?

Q10. Does JNJ have more total risk than the S&P500?

Q11. What's the beta for the S&P500?

Let's estimate the "required return" for JNJ. Here are the historic returns for various asset classes. Step one is to calculate the historic rates of returns on various asset classes. This is similar to the exercise that we did in class with the growth of a dollar charts.

Beginning Value Ending Value

12/31/1925 12/31/2020

Small stocks $1.00 $33,500.00

Large Stocks [S&P500] $1.00 $ 6,850.00

LT Government Bonds $1.00 $ 180.00

T-Bills $1.00 $ 34.00

Inflation $1.00 $ 20.00

Q12-Q15. Calculate the Geometric Average Returns from 1925 to 2020 [Fidelity calls them the average annual returns] for each of the asset classes:

SHOW WORK. NO WORK. NO POINTS

Q12. Small stocks

Q13. Large Stocks [S&P500]

Q14. LT Government Bonds

Q15. T-Bills

Q16: For this time frame [1925 to 2020], what has been the Geometric Average Return of the Market [Rm]?

SHOW WORK. NO WORK. NO POINTS.

Q17 & Q18. Give the CAPM equation that is used to find the required return for a stock. Define all terms.

Q19 & Q20. Use this equation to estimate the "required return" for JNJ stock. For simplicity, use the historic geometric returns as inputs in the equation. That is, assume that the future returns for the S&P500 and the risk free rate are the same going forward as they have been in the past.