Stock Analysis on Net
Stock Analysis on Net

Broadcom Inc. (NASDAQ:AVGO)

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 Broadcom Inc. common stock.

Rates of Return

Broadcom Inc., monthly rates of return

Microsoft Excel
Broadcom Inc. (AVGO) Standard & Poor’s 500 (S&P 500)
t Date PriceAVGO,t1 DividendAVGO,t1 RAVGO,t2 PriceS&P 500,t RS&P 500,t3
Nov 30, 2019 $31.62 3,140.98
1. Dec 31, 2019 $31.60 $0.325 0.96% 3,230.78 2.86%
2. Jan 31, 2020 $30.52 -3.42% 3,225.52 -0.16%
3. Feb 29, 2020 $27.26 -10.68% 2,954.22 -8.41%
. . . . . . .
. . . . . . .
. . . . . . .
70. Sep 30, 2025 $329.91 $0.59 11.13% 6,688.46 3.53%
71. Oct 31, 2025 $369.63 12.04% 6,840.20 2.27%
Average (R): 4.25% 1.22%
Standard deviation: 10.42% 4.97%
Broadcom Inc. (AVGO) Standard & Poor’s 500 (S&P 500)
t Date PriceAVGO,t1 DividendAVGO,t1 RAVGO,t2 PriceS&P 500,t RS&P 500,t3
Nov 30, 2019 $31.62 3,140.98
1. Dec 31, 2019 $31.60 $0.325 0.96% 3,230.78 2.86%
2. Jan 31, 2020 $30.52 -3.42% 3,225.52 -0.16%
3. Feb 29, 2020 $27.26 -10.68% 2,954.22 -8.41%
4. Mar 31, 2020 $23.71 $0.325 -11.83% 2,584.59 -12.51%
5. Apr 30, 2020 $27.16 14.55% 2,912.43 12.68%
6. May 31, 2020 $29.13 7.25% 3,044.31 4.53%
7. Jun 30, 2020 $31.56 $0.325 9.46% 3,100.29 1.84%
8. Jul 31, 2020 $31.68 0.38% 3,271.12 5.51%
9. Aug 31, 2020 $34.72 9.60% 3,500.31 7.01%
10. Sep 30, 2020 $36.43 $0.325 5.86% 3,363.00 -3.92%
11. Oct 31, 2020 $34.96 -4.04% 3,269.96 -2.77%
12. Nov 30, 2020 $40.16 14.87% 3,621.63 10.75%
13. Dec 31, 2020 $43.79 $0.36 9.94% 3,756.07 3.71%
14. Jan 31, 2021 $45.05 2.88% 3,714.24 -1.11%
15. Feb 28, 2021 $46.99 4.31% 3,811.15 2.61%
16. Mar 31, 2021 $46.37 $0.36 -0.55% 3,972.89 4.24%
17. Apr 30, 2021 $45.62 -1.62% 4,181.17 5.24%
18. May 31, 2021 $47.23 3.53% 4,204.11 0.55%
19. Jun 30, 2021 $47.68 $0.36 1.72% 4,297.50 2.22%
20. Jul 31, 2021 $48.54 1.80% 4,395.26 2.27%
21. Aug 31, 2021 $49.72 2.43% 4,522.68 2.90%
22. Sep 30, 2021 $48.49 $0.36 -1.75% 4,307.54 -4.76%
23. Oct 31, 2021 $53.17 9.65% 4,605.38 6.91%
24. Nov 30, 2021 $55.37 4.14% 4,567.00 -0.83%
25. Dec 31, 2021 $66.54 $0.41 20.91% 4,766.18 4.36%
26. Jan 31, 2022 $58.59 -11.95% 4,515.55 -5.26%
27. Feb 28, 2022 $58.74 0.26% 4,373.94 -3.14%
28. Mar 31, 2022 $62.97 $0.41 7.90% 4,530.41 3.58%
29. Apr 30, 2022 $55.44 -11.96% 4,131.93 -8.80%
30. May 31, 2022 $58.01 4.64% 4,132.15 0.01%
31. Jun 30, 2022 $48.58 $0.41 -15.55% 3,785.38 -8.39%
32. Jul 31, 2022 $53.55 10.23% 4,130.29 9.11%
33. Aug 31, 2022 $49.91 -6.80% 3,955.00 -4.24%
34. Sep 30, 2022 $44.40 $0.41 -10.22% 3,585.62 -9.34%
35. Oct 31, 2022 $47.01 5.88% 3,871.98 7.99%
36. Nov 30, 2022 $55.10 17.21% 4,080.11 5.38%
37. Dec 31, 2022 $55.91 $0.46 2.30% 3,839.50 -5.90%
38. Jan 31, 2023 $58.50 4.63% 4,076.60 6.18%
39. Feb 28, 2023 $59.43 1.59% 3,970.15 -2.61%
40. Mar 31, 2023 $64.15 $0.46 8.72% 4,109.31 3.51%
41. Apr 30, 2023 $62.65 -2.34% 4,169.48 1.46%
42. May 31, 2023 $80.80 28.97% 4,179.83 0.25%
43. Jun 30, 2023 $86.74 $0.46 7.92% 4,376.86 4.71%
44. Jul 31, 2023 $89.87 3.61% 4,588.96 4.85%
45. Aug 31, 2023 $92.29 2.69% 4,507.66 -1.77%
46. Sep 30, 2023 $83.06 $0.46 -9.50% 4,288.05 -4.87%
47. Oct 31, 2023 $84.14 1.30% 4,193.80 -2.20%
48. Nov 30, 2023 $92.57 10.02% 4,567.80 8.92%
49. Dec 31, 2023 $111.63 $0.525 21.16% 4,769.83 4.42%
50. Jan 31, 2024 $118.00 5.71% 4,845.65 1.59%
51. Feb 29, 2024 $130.05 10.21% 5,096.27 5.17%
52. Mar 31, 2024 $132.54 $0.525 2.32% 5,254.35 3.10%
53. Apr 30, 2024 $130.03 -1.89% 5,035.69 -4.16%
54. May 31, 2024 $132.86 2.18% 5,277.51 4.80%
55. Jun 30, 2024 $160.55 $0.525 21.24% 5,460.48 3.47%
56. Jul 31, 2024 $160.68 0.08% 5,522.30 1.13%
57. Aug 31, 2024 $162.82 1.33% 5,648.40 2.28%
58. Sep 30, 2024 $172.50 $0.53 6.27% 5,762.48 2.02%
59. Oct 31, 2024 $169.77 -1.58% 5,705.45 -0.99%
60. Nov 30, 2024 $162.08 -4.53% 6,032.38 5.73%
61. Dec 31, 2024 $231.84 $0.59 43.40% 5,881.63 -2.50%
62. Jan 31, 2025 $221.27 -4.56% 6,040.53 2.70%
63. Feb 28, 2025 $199.43 -9.87% 5,954.50 -1.42%
64. Mar 31, 2025 $167.43 $0.59 -15.75% 5,611.85 -5.75%
65. Apr 30, 2025 $192.47 14.96% 5,569.06 -0.76%
66. May 31, 2025 $242.07 25.77% 5,911.69 6.15%
67. Jun 30, 2025 $275.65 $0.59 14.12% 6,204.95 4.96%
68. Jul 31, 2025 $293.70 6.55% 6,339.39 2.17%
69. Aug 31, 2025 $297.39 1.26% 6,460.26 1.91%
70. Sep 30, 2025 $329.91 $0.59 11.13% 6,688.46 3.53%
71. Oct 31, 2025 $369.63 12.04% 6,840.20 2.27%
Average (R): 4.25% 1.22%
Standard deviation: 10.42% 4.97%

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 AVGO during period t

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

Variance and Covariance

Broadcom Inc., calculation of variance and covariance of returns

Microsoft Excel
t Date RAVGO,t RS&P 500,t (RAVGO,t–RAVGO)2 (RS&P 500,t–RS&P 500)2 (RAVGO,t–RAVGO)×(RS&P 500,t–RS&P 500)
1. Dec 31, 2019 0.96% 2.86% 10.76 2.67 -5.36
2. Jan 31, 2020 -3.42% -0.16% 58.73 1.93 10.63
3. Feb 29, 2020 -10.68% -8.41% 222.82 92.85 143.83
. . . . . . .
. . . . . . .
. . . . . . .
70. Sep 30, 2025 11.13% 3.53% 47.44 5.32 15.89
71. Oct 31, 2025 12.04% 2.27% 60.75 1.09 8.14
Total (Σ): 7,595.30 1,731.31 1,979.33
t Date RAVGO,t RS&P 500,t (RAVGO,t–RAVGO)2 (RS&P 500,t–RS&P 500)2 (RAVGO,t–RAVGO)×(RS&P 500,t–RS&P 500)
1. Dec 31, 2019 0.96% 2.86% 10.76 2.67 -5.36
2. Jan 31, 2020 -3.42% -0.16% 58.73 1.93 10.63
3. Feb 29, 2020 -10.68% -8.41% 222.82 92.85 143.83
4. Mar 31, 2020 -11.83% -12.51% 258.44 188.70 220.83
5. Apr 30, 2020 14.55% 12.68% 106.20 131.32 118.09
6. May 31, 2020 7.25% 4.53% 9.05 10.91 9.94
7. Jun 30, 2020 9.46% 1.84% 27.17 0.38 3.20
8. Jul 31, 2020 0.38% 5.51% 14.94 18.36 -16.56
9. Aug 31, 2020 9.60% 7.01% 28.63 33.43 30.93
10. Sep 30, 2020 5.86% -3.92% 2.61 26.50 -8.32
11. Oct 31, 2020 -4.04% -2.77% 68.57 15.93 33.05
12. Nov 30, 2020 14.87% 10.75% 112.97 90.82 101.29
13. Dec 31, 2020 9.94% 3.71% 32.37 6.19 14.15
14. Jan 31, 2021 2.88% -1.11% 1.87 5.47 3.20
15. Feb 28, 2021 4.31% 2.61% 0.00 1.92 0.08
16. Mar 31, 2021 -0.55% 4.24% 23.03 9.11 -14.49
17. Apr 30, 2021 -1.62% 5.24% 34.37 16.14 -23.56
18. May 31, 2021 3.53% 0.55% 0.51 0.46 0.48
19. Jun 30, 2021 1.72% 2.22% 6.40 0.99 -2.52
20. Jul 31, 2021 1.80% 2.27% 5.96 1.10 -2.56
21. Aug 31, 2021 2.43% 2.90% 3.29 2.80 -3.04
22. Sep 30, 2021 -1.75% -4.76% 35.94 35.78 35.86
23. Oct 31, 2021 9.65% 6.91% 29.22 32.37 30.76
24. Nov 30, 2021 4.14% -0.83% 0.01 4.24 0.22
25. Dec 31, 2021 20.91% 4.36% 277.83 9.84 52.28
26. Jan 31, 2022 -11.95% -5.26% 262.22 42.03 104.99
27. Feb 28, 2022 0.26% -3.14% 15.92 19.02 17.40
28. Mar 31, 2022 7.90% 3.58% 13.35 5.53 8.60
29. Apr 30, 2022 -11.96% -8.80% 262.56 100.41 162.37
30. May 31, 2022 4.64% 0.01% 0.15 1.49 -0.48
31. Jun 30, 2022 -15.55% -8.39% 391.83 92.48 190.36
32. Jul 31, 2022 10.23% 9.11% 35.82 62.20 47.20
33. Aug 31, 2022 -6.80% -4.24% 121.95 29.91 60.39
34. Sep 30, 2022 -10.22% -9.34% 209.21 111.61 152.80
35. Oct 31, 2022 5.88% 7.99% 2.67 45.72 11.04
36. Nov 30, 2022 17.21% 5.38% 168.05 17.23 53.81
37. Dec 31, 2022 2.30% -5.90% 3.77 50.72 13.82
38. Jan 31, 2023 4.63% 6.18% 0.15 24.51 1.92
39. Feb 28, 2023 1.59% -2.61% 7.05 14.72 10.19
40. Mar 31, 2023 8.72% 3.51% 19.99 5.20 10.19
41. Apr 30, 2023 -2.34% 1.46% 43.35 0.06 -1.58
42. May 31, 2023 28.97% 0.25% 611.32 0.95 -24.14
43. Jun 30, 2023 7.92% 4.71% 13.51 12.17 12.82
44. Jul 31, 2023 3.61% 4.85% 0.41 13.11 -2.31
45. Aug 31, 2023 2.69% -1.77% 2.41 8.98 4.65
46. Sep 30, 2023 -9.50% -4.87% 189.01 37.17 83.82
47. Oct 31, 2023 1.30% -2.20% 8.67 11.72 10.08
48. Nov 30, 2023 10.02% 8.92% 33.33 59.18 44.42
49. Dec 31, 2023 21.16% 4.42% 286.00 10.23 54.09
50. Jan 31, 2024 5.71% 1.59% 2.13 0.13 0.53
51. Feb 29, 2024 10.21% 5.17% 35.60 15.58 23.55
52. Mar 31, 2024 2.32% 3.10% 3.71 3.52 -3.62
53. Apr 30, 2024 -1.89% -4.16% 37.69 29.01 33.07
54. May 31, 2024 2.18% 4.80% 4.28 12.80 -7.40
55. Jun 30, 2024 21.24% 3.47% 288.70 5.03 38.10
56. Jul 31, 2024 0.08% 1.13% 17.34 0.01 0.39
57. Aug 31, 2024 1.33% 2.28% 8.49 1.12 -3.08
58. Sep 30, 2024 6.27% 2.02% 4.10 0.63 1.61
59. Oct 31, 2024 -1.58% -0.99% 33.97 4.90 12.91
60. Nov 30, 2024 -4.53% 5.73% 77.00 20.30 -39.54
61. Dec 31, 2024 43.40% -2.50% 1,533.42 13.87 -145.82
62. Jan 31, 2025 -4.56% 2.70% 77.52 2.18 -13.00
63. Feb 28, 2025 -9.87% -1.42% 199.26 7.02 37.39
64. Mar 31, 2025 -15.75% -5.75% 399.82 48.71 139.55
65. Apr 30, 2025 14.96% -0.76% 114.70 3.95 -21.28
66. May 31, 2025 25.77% 6.15% 463.31 24.28 106.07
67. Jun 30, 2025 14.12% 4.96% 97.42 13.96 36.87
68. Jul 31, 2025 6.55% 2.17% 5.30 0.89 2.17
69. Aug 31, 2025 1.26% 1.91% 8.94 0.46 -2.04
70. Sep 30, 2025 11.13% 3.53% 47.44 5.32 15.89
71. Oct 31, 2025 12.04% 2.27% 60.75 1.09 8.14
Total (Σ): 7,595.30 1,731.31 1,979.33

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VarianceAVGO = Σ(RAVGO,t–RAVGO)2 ÷ (71 – 1)
= 7,595.30 ÷ (71 – 1)
= 108.50

VarianceS&P 500 = Σ(RS&P 500,t–RS&P 500)2 ÷ (71 – 1)
= 1,731.31 ÷ (71 – 1)
= 24.73

CovarianceAVGO, S&P 500 = Σ(RAVGO,t–RAVGO)×(RS&P 500,t–RS&P 500) ÷ (71 – 1)
= 1,979.33 ÷ (71 – 1)
= 28.28

Systematic Risk (β) Estimation

Microsoft Excel
VarianceAVGO 108.50
VarianceS&P 500 24.73
CovarianceAVGO, S&P 500 28.28
Correlation coefficientAVGO, S&P 5001 0.55
βAVGO2 1.14
αAVGO3 2.85%

Calculations

1 Correlation coefficientAVGO, S&P 500
= CovarianceAVGO, S&P 500 ÷ (Standard deviationAVGO × Standard deviationS&P 500)
= 28.28 ÷ (10.42% × 4.97%)
= 0.55

2 βAVGO
= CovarianceAVGO, S&P 500 ÷ VarianceS&P 500
= 28.28 ÷ 24.73
= 1.14

3 αAVGO
= AverageAVGO – βAVGO × AverageS&P 500
= 4.25% – 1.14 × 1.22%
= 2.85%

Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.79%
Expected rate of return on market portfolio2 E(RM) 17.38%
Systematic risk (β) of Broadcom Inc. common stock βAVGO 1.14
 
Expected rate of return on Broadcom Inc. common stock3 E(RAVGO) 19.18%

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(RAVGO) = RF + βAVGO [E(RM) – RF]
= 4.79% + 1.14 [17.38% – 4.79%]
= 19.18%