Application of the C.A.P.M. on NYSE & NASDAQ Stocks: Toyota in NYSE
Date Submitted: 09/10/2006 04:51:00
Category: / Social Sciences / Education
Length: 2 pages (555 words)
Category: / Social Sciences / Education
Length: 2 pages (555 words)
Introduction
In order to analyze and apply the C.A.P.M. on the stock of Toyota, one must know what the C.A.P.M. is. This is a formula which is actually an abbreviation of Capital Asset Pricing Model and is used in order to find the appropriate price of an asset. If we analyze the C.A.P.M., we can find the expected return of a stock, such as is demanded …
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…- beta of Toyota is equal to 0, 96 as of 8-1-2006, which means that as the market moves, the stock of Toyota will move.
Conclusion
After analyzing the factors which put up the equation of the C.A.P.M., the whole equation can be put together, giving us the expected return for Toyota motors in NYSE.
E(Ri) = 4.25+(9.44-4.25)*0,96 = 9,2324% = 9,23%
So, the expected return for the stock of Toyota motors, as of 6-1-2006 is 9, 23%
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