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28 Sep 2019
1. Returns and Cost of Equity. Using the stock price data in the attached spreadsheet, estimate the cost of equity for Bank of America. Assume a market risk premium of 5% and a risk free rate of 3.29
Date Return Market Return 20070228 -2% -1.40% 20070330 0% 1.29% 20070430 0% 3.98% 20070531 1% 3.89% 20070629 -4% -1.48% 20070731 -3% -3.18% 20070831 7% 1.17% 20070928 0% 4.09% 20071031 -4% 2.58% 20071130 -4% -4.92% 20071231 -9% -0.44% 20080131 7% -6.22% 20080229 -10% -2.17% 20080331 -3% -1.04% 20080430 -1% 5.11% 20080530 -9% 2.38% 20080630 -28% -7.84% 20080731 38% -1.33% 20080829 -5% 1.06% 20080930 14% -9.80% 20081031 -31% -18.46% 20081128 -33% -8.46% 20081231 -11% 2.21% 20090130 -53% -7.73% 20090227 -40% -10.02% 20090331 73% 8.67% 20090430 31% 10.94% 20090529 26% 6.78% 20090630 17% -0.31% 20090731 12% 8.17% 20090831 19% 3.15% 20090930 -4% 4.52% 20091030 -14% -2.80% 20091130 9% 5.71% 20091231 -5% 2.84% 20100129 1% -3.71% 20100226 10% 3.48% 20100331 7% 6.36% 20100430 0% 2.00% 20100528 -12% -7.91% 20100630 -9% -5.07% 20100730 -2% 7.03% 20100831 -11% -4.28% 20100930 5% 9.15% 20101029 -13% 3.85% 20101130 -4% 0.51% 20101231 22% 6.72% 20110131 3% 1.92% 20110228 4% 3.82% 20110331 -7% 0.34% 20110429 -8% 2.87% 20110531 -4% -1.49% 20110630 -7% -1.84% 20110729 -11% -2.25% 20110831 -16% -5.75% 20110930 -25% -8.49% 20111031 12% 11.40% 20111130 -20% -0.62% 20111230 2% 0.37% 20120131 28% 5.41% 20120229 12% 4.12% 20120330 20% 2.40% 20120430 -15% -0.68% 20120531 -9% -6.55% 20120629 11% 3.82% 20120731 -10% 1.03% 20120831 9% 2.63% 20120928 11% 2.65% 20121031 6% -1.41% 20121130 6% 0.62% 20121231 18% 1.25% 20130131 -2% 5.41% 20130228 -1% 0.83% 20130328 8% 3.53% 20130430 1% 1.49% 20130531 11% 1.91% 20130628 -6% -1.50% 20130731 14% 5.27% 20130830 -3% -2.57% 20130930 -2% 3.75% 20131031 1% 3.99% 20131129 13% 2.49% 20131231 -2% 2.61%
1. Returns and Cost of Equity. Using the stock price data in the attached spreadsheet, estimate the cost of equity for Bank of America. Assume a market risk premium of 5% and a risk free rate of 3.29
| Date | Return | Market Return | |
| 20070228 | -2% | -1.40% | |
| 20070330 | 0% | 1.29% | |
| 20070430 | 0% | 3.98% | |
| 20070531 | 1% | 3.89% | |
| 20070629 | -4% | -1.48% | |
| 20070731 | -3% | -3.18% | |
| 20070831 | 7% | 1.17% | |
| 20070928 | 0% | 4.09% | |
| 20071031 | -4% | 2.58% | |
| 20071130 | -4% | -4.92% | |
| 20071231 | -9% | -0.44% | |
| 20080131 | 7% | -6.22% | |
| 20080229 | -10% | -2.17% | |
| 20080331 | -3% | -1.04% | |
| 20080430 | -1% | 5.11% | |
| 20080530 | -9% | 2.38% | |
| 20080630 | -28% | -7.84% | |
| 20080731 | 38% | -1.33% | |
| 20080829 | -5% | 1.06% | |
| 20080930 | 14% | -9.80% | |
| 20081031 | -31% | -18.46% | |
| 20081128 | -33% | -8.46% | |
| 20081231 | -11% | 2.21% | |
| 20090130 | -53% | -7.73% | |
| 20090227 | -40% | -10.02% | |
| 20090331 | 73% | 8.67% | |
| 20090430 | 31% | 10.94% | |
| 20090529 | 26% | 6.78% | |
| 20090630 | 17% | -0.31% | |
| 20090731 | 12% | 8.17% | |
| 20090831 | 19% | 3.15% | |
| 20090930 | -4% | 4.52% | |
| 20091030 | -14% | -2.80% | |
| 20091130 | 9% | 5.71% | |
| 20091231 | -5% | 2.84% | |
| 20100129 | 1% | -3.71% | |
| 20100226 | 10% | 3.48% | |
| 20100331 | 7% | 6.36% | |
| 20100430 | 0% | 2.00% | |
| 20100528 | -12% | -7.91% | |
| 20100630 | -9% | -5.07% | |
| 20100730 | -2% | 7.03% | |
| 20100831 | -11% | -4.28% | |
| 20100930 | 5% | 9.15% | |
| 20101029 | -13% | 3.85% | |
| 20101130 | -4% | 0.51% | |
| 20101231 | 22% | 6.72% | |
| 20110131 | 3% | 1.92% | |
| 20110228 | 4% | 3.82% | |
| 20110331 | -7% | 0.34% | |
| 20110429 | -8% | 2.87% | |
| 20110531 | -4% | -1.49% | |
| 20110630 | -7% | -1.84% | |
| 20110729 | -11% | -2.25% | |
| 20110831 | -16% | -5.75% | |
| 20110930 | -25% | -8.49% | |
| 20111031 | 12% | 11.40% | |
| 20111130 | -20% | -0.62% | |
| 20111230 | 2% | 0.37% | |
| 20120131 | 28% | 5.41% | |
| 20120229 | 12% | 4.12% | |
| 20120330 | 20% | 2.40% | |
| 20120430 | -15% | -0.68% | |
| 20120531 | -9% | -6.55% | |
| 20120629 | 11% | 3.82% | |
| 20120731 | -10% | 1.03% | |
| 20120831 | 9% | 2.63% | |
| 20120928 | 11% | 2.65% | |
| 20121031 | 6% | -1.41% | |
| 20121130 | 6% | 0.62% | |
| 20121231 | 18% | 1.25% | |
| 20130131 | -2% | 5.41% | |
| 20130228 | -1% | 0.83% | |
| 20130328 | 8% | 3.53% | |
| 20130430 | 1% | 1.49% | |
| 20130531 | 11% | 1.91% | |
| 20130628 | -6% | -1.50% | |
| 20130731 | 14% | 5.27% | |
| 20130830 | -3% | -2.57% | |
| 20130930 | -2% | 3.75% | |
| 20131031 | 1% | 3.99% | |
| 20131129 | 13% | 2.49% | |
| 20131231 | -2% | 2.61% |
Jamar FerryLv2
28 Sep 2019