Stock Analysis on Net

Booking Holdings Inc. (NASDAQ:BKNG)

Capital Asset Pricing Model (CAPM)

Microsoft Excel

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Booking Holdings Inc. common stock.


Rates of Return

Booking Holdings Inc., monthly rates of return

Microsoft Excel
Booking Holdings Inc. (BKNG) Standard & Poor’s 500 (S&P 500)
t Date PriceBKNG,t1 DividendBKNG,t1 RBKNG,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2019 $1,832.81 2,704.10
1. Feb 28, 2019 $1,697.04 -7.41% 2,784.49 2.97%
2. Mar 31, 2019 $1,744.91 2.82% 2,834.40 1.79%
3. Apr 30, 2019 $1,854.99 6.31% 2,945.83 3.93%
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2023 $3,125.70 12.05% 4,567.80 8.92%
59. Dec 31, 2023 $3,547.22 13.49% 4,769.83 4.42%
Average (R): 1.62% 1.11%
Standard deviation: 10.03% 5.31%
Booking Holdings Inc. (BKNG) Standard & Poor’s 500 (S&P 500)
t Date PriceBKNG,t1 DividendBKNG,t1 RBKNG,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2019 $1,832.81 2,704.10
1. Feb 28, 2019 $1,697.04 -7.41% 2,784.49 2.97%
2. Mar 31, 2019 $1,744.91 2.82% 2,834.40 1.79%
3. Apr 30, 2019 $1,854.99 6.31% 2,945.83 3.93%
4. May 31, 2019 $1,656.22 -10.72% 2,752.06 -6.58%
5. Jun 30, 2019 $1,874.71 13.19% 2,941.76 6.89%
6. Jul 31, 2019 $1,886.61 0.63% 2,980.38 1.31%
7. Aug 31, 2019 $1,966.41 4.23% 2,926.46 -1.81%
8. Sep 30, 2019 $1,962.61 -0.19% 2,976.74 1.72%
9. Oct 31, 2019 $2,048.77 4.39% 3,037.56 2.04%
10. Nov 30, 2019 $1,904.03 -7.06% 3,140.98 3.40%
11. Dec 31, 2019 $2,053.73 7.86% 3,230.78 2.86%
12. Jan 31, 2020 $1,830.55 -10.87% 3,225.52 -0.16%
13. Feb 29, 2020 $1,695.66 -7.37% 2,954.22 -8.41%
14. Mar 31, 2020 $1,345.32 -20.66% 2,584.59 -12.51%
15. Apr 30, 2020 $1,480.57 10.05% 2,912.43 12.68%
16. May 31, 2020 $1,639.42 10.73% 3,044.31 4.53%
17. Jun 30, 2020 $1,592.34 -2.87% 3,100.29 1.84%
18. Jul 31, 2020 $1,662.13 4.38% 3,271.12 5.51%
19. Aug 31, 2020 $1,910.45 14.94% 3,500.31 7.01%
20. Sep 30, 2020 $1,710.68 -10.46% 3,363.00 -3.92%
21. Oct 31, 2020 $1,622.50 -5.15% 3,269.96 -2.77%
22. Nov 30, 2020 $2,028.45 25.02% 3,621.63 10.75%
23. Dec 31, 2020 $2,227.27 9.80% 3,756.07 3.71%
24. Jan 31, 2021 $1,944.33 -12.70% 3,714.24 -1.11%
25. Feb 28, 2021 $2,328.51 19.76% 3,811.15 2.61%
26. Mar 31, 2021 $2,329.84 0.06% 3,972.89 4.24%
27. Apr 30, 2021 $2,466.08 5.85% 4,181.17 5.24%
28. May 31, 2021 $2,361.55 -4.24% 4,204.11 0.55%
29. Jun 30, 2021 $2,188.09 -7.35% 4,297.50 2.22%
30. Jul 31, 2021 $2,178.26 -0.45% 4,395.26 2.27%
31. Aug 31, 2021 $2,299.67 5.57% 4,522.68 2.90%
32. Sep 30, 2021 $2,373.87 3.23% 4,307.54 -4.76%
33. Oct 31, 2021 $2,420.78 1.98% 4,605.38 6.91%
34. Nov 30, 2021 $2,101.85 -13.17% 4,567.00 -0.83%
35. Dec 31, 2021 $2,399.23 14.15% 4,766.18 4.36%
36. Jan 31, 2022 $2,456.13 2.37% 4,515.55 -5.26%
37. Feb 28, 2022 $2,172.25 -11.56% 4,373.94 -3.14%
38. Mar 31, 2022 $2,348.45 8.11% 4,530.41 3.58%
39. Apr 30, 2022 $2,210.31 -5.88% 4,131.93 -8.80%
40. May 31, 2022 $2,243.56 1.50% 4,132.15 0.01%
41. Jun 30, 2022 $1,748.99 -22.04% 3,785.38 -8.39%
42. Jul 31, 2022 $1,935.69 10.67% 4,130.29 9.11%
43. Aug 31, 2022 $1,875.81 -3.09% 3,955.00 -4.24%
44. Sep 30, 2022 $1,643.21 -12.40% 3,585.62 -9.34%
45. Oct 31, 2022 $1,869.48 13.77% 3,871.98 7.99%
46. Nov 30, 2022 $2,079.45 11.23% 4,080.11 5.38%
47. Dec 31, 2022 $2,015.28 -3.09% 3,839.50 -5.90%
48. Jan 31, 2023 $2,434.10 20.78% 4,076.60 6.18%
49. Feb 28, 2023 $2,524.00 3.69% 3,970.15 -2.61%
50. Mar 31, 2023 $2,652.41 5.09% 4,109.31 3.51%
51. Apr 30, 2023 $2,686.31 1.28% 4,169.48 1.46%
52. May 31, 2023 $2,508.77 -6.61% 4,179.83 0.25%
53. Jun 30, 2023 $2,700.33 7.64% 4,376.86 4.71%
54. Jul 31, 2023 $2,970.80 10.02% 4,588.96 4.85%
55. Aug 31, 2023 $3,105.03 4.52% 4,507.66 -1.77%
56. Sep 30, 2023 $3,083.95 -0.68% 4,288.05 -4.87%
57. Oct 31, 2023 $2,789.56 -9.55% 4,193.80 -2.20%
58. Nov 30, 2023 $3,125.70 12.05% 4,567.80 8.92%
59. Dec 31, 2023 $3,547.22 13.49% 4,769.83 4.42%
Average (R): 1.62% 1.11%
Standard deviation: 10.03% 5.31%

Show all

1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of BKNG during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t


Variance and Covariance

Booking Holdings Inc., calculation of variance and covariance of returns

Microsoft Excel
t Date RBKNG,t RS&P 500,t (RBKNG,tRBKNG)2 (RS&P 500,tRS&P 500)2 (RBKNG,tRBKNG)×(RS&P 500,tRS&P 500)
1. Feb 28, 2019 -7.41% 2.97% 81.50 3.49 -16.86
2. Mar 31, 2019 2.82% 1.79% 1.44 0.47 0.82
3. Apr 30, 2019 6.31% 3.93% 21.98 7.98 13.25
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2023 12.05% 8.92% 108.78 61.03 81.48
59. Dec 31, 2023 13.49% 4.42% 140.79 11.00 39.36
Total (Σ): 5,832.06 1,634.30 2,319.48
t Date RBKNG,t RS&P 500,t (RBKNG,tRBKNG)2 (RS&P 500,tRS&P 500)2 (RBKNG,tRBKNG)×(RS&P 500,tRS&P 500)
1. Feb 28, 2019 -7.41% 2.97% 81.50 3.49 -16.86
2. Mar 31, 2019 2.82% 1.79% 1.44 0.47 0.82
3. Apr 30, 2019 6.31% 3.93% 21.98 7.98 13.25
4. May 31, 2019 -10.72% -6.58% 152.17 59.04 94.78
5. Jun 30, 2019 13.19% 6.89% 133.91 33.49 66.97
6. Jul 31, 2019 0.63% 1.31% 0.97 0.04 -0.20
7. Aug 31, 2019 4.23% -1.81% 6.81 8.50 -7.61
8. Sep 30, 2019 -0.19% 1.72% 3.29 0.37 -1.11
9. Oct 31, 2019 4.39% 2.04% 7.67 0.88 2.60
10. Nov 30, 2019 -7.06% 3.40% 75.43 5.28 -19.97
11. Dec 31, 2019 7.86% 2.86% 38.96 3.07 10.94
12. Jan 31, 2020 -10.87% -0.16% 155.93 1.61 15.84
13. Feb 29, 2020 -7.37% -8.41% 80.80 90.57 85.55
14. Mar 31, 2020 -20.66% -12.51% 496.45 185.44 303.42
15. Apr 30, 2020 10.05% 12.68% 71.12 134.06 97.64
16. May 31, 2020 10.73% 4.53% 82.97 11.71 31.17
17. Jun 30, 2020 -2.87% 1.84% 20.18 0.54 -3.29
18. Jul 31, 2020 4.38% 5.51% 7.63 19.40 12.17
19. Aug 31, 2020 14.94% 7.01% 177.41 34.82 78.59
20. Sep 30, 2020 -10.46% -3.92% 145.85 25.29 60.73
21. Oct 31, 2020 -5.15% -2.77% 45.90 15.00 26.24
22. Nov 30, 2020 25.02% 10.75% 547.55 93.10 225.78
23. Dec 31, 2020 9.80% 3.71% 66.93 6.79 21.32
24. Jan 31, 2021 -12.70% -1.11% 205.17 4.93 31.79
25. Feb 28, 2021 19.76% 2.61% 329.01 2.26 27.27
26. Mar 31, 2021 0.06% 4.24% 2.44 9.85 -4.91
27. Apr 30, 2021 5.85% 5.24% 17.87 17.11 17.49
28. May 31, 2021 -4.24% 0.55% 34.33 0.31 3.26
29. Jun 30, 2021 -7.35% 2.22% 80.38 1.24 -10.00
30. Jul 31, 2021 -0.45% 2.27% 4.28 1.37 -2.42
31. Aug 31, 2021 5.57% 2.90% 15.63 3.22 7.09
32. Sep 30, 2021 3.23% -4.76% 2.58 34.37 -9.42
33. Oct 31, 2021 1.98% 6.91% 0.13 33.74 2.07
34. Nov 30, 2021 -13.17% -0.83% 218.89 3.76 28.69
35. Dec 31, 2021 14.15% 4.36% 156.96 10.60 40.78
36. Jan 31, 2022 2.37% -5.26% 0.56 40.51 -4.78
37. Feb 28, 2022 -11.56% -3.14% 173.67 17.99 55.90
38. Mar 31, 2022 8.11% 3.58% 42.14 6.11 16.04
39. Apr 30, 2022 -5.88% -8.80% 56.29 98.04 74.29
40. May 31, 2022 1.50% 0.01% 0.01 1.21 0.13
41. Jun 30, 2022 -22.04% -8.39% 560.00 90.21 224.76
42. Jul 31, 2022 10.67% 9.11% 81.98 64.09 72.49
43. Aug 31, 2022 -3.09% -4.24% 22.22 28.62 25.22
44. Sep 30, 2022 -12.40% -9.34% 196.57 109.11 146.45
45. Oct 31, 2022 13.77% 7.99% 147.62 47.34 83.60
46. Nov 30, 2022 11.23% 5.38% 92.38 18.23 41.03
47. Dec 31, 2022 -3.09% -5.90% 22.15 49.04 32.96
48. Jan 31, 2023 20.78% 6.18% 367.18 25.70 97.14
49. Feb 28, 2023 3.69% -2.61% 4.30 13.82 -7.71
50. Mar 31, 2023 5.09% 3.51% 12.02 5.76 8.32
51. Apr 30, 2023 1.28% 1.46% 0.12 0.13 -0.12
52. May 31, 2023 -6.61% 0.25% 67.72 0.74 7.06
53. Jun 30, 2023 7.64% 4.71% 36.18 13.02 21.70
54. Jul 31, 2023 10.02% 4.85% 70.49 13.99 31.40
55. Aug 31, 2023 4.52% -1.77% 8.40 8.28 -8.34
56. Sep 30, 2023 -0.68% -4.87% 5.29 35.73 13.74
57. Oct 31, 2023 -9.55% -2.20% 124.68 10.92 36.89
58. Nov 30, 2023 12.05% 8.92% 108.78 61.03 81.48
59. Dec 31, 2023 13.49% 4.42% 140.79 11.00 39.36
Total (Σ): 5,832.06 1,634.30 2,319.48

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VarianceBKNG = Σ(RBKNG,tRBKNG)2 ÷ (59 – 1)
= 5,832.06 ÷ (59 – 1)
= 100.55

VarianceS&P 500 = Σ(RS&P 500,tRS&P 500)2 ÷ (59 – 1)
= 1,634.30 ÷ (59 – 1)
= 28.18

CovarianceBKNG, S&P 500 = Σ(RBKNG,tRBKNG)×(RS&P 500,tRS&P 500) ÷ (59 – 1)
= 2,319.48 ÷ (59 – 1)
= 39.99


Systematic Risk (β) Estimation

Microsoft Excel
VarianceBKNG 100.55
VarianceS&P 500 28.18
CovarianceBKNG, S&P 500 39.99
Correlation coefficientBKNG, S&P 5001 0.75
βBKNG2 1.42
αBKNG3 0.05%

Calculations

1 Correlation coefficientBKNG, S&P 500
= CovarianceBKNG, S&P 500 ÷ (Standard deviationBKNG × Standard deviationS&P 500)
= 39.99 ÷ (10.03% × 5.31%)
= 0.75

2 βBKNG
= CovarianceBKNG, S&P 500 ÷ VarianceS&P 500
= 39.99 ÷ 28.18
= 1.42

3 αBKNG
= AverageBKNG – βBKNG × AverageS&P 500
= 1.62%1.42 × 1.11%
= 0.05%


Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.43%
Expected rate of return on market portfolio2 E(RM) 13.60%
Systematic risk (β) of Booking Holdings Inc. common stock βBKNG 1.42
 
Expected rate of return on Booking Holdings Inc. common stock3 E(RBKNG) 17.45%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(RBKNG) = RF + βBKNG [E(RM) – RF]
= 4.43% + 1.42 [13.60%4.43%]
= 17.45%