Gilead Sciences Inc. (NASDAQ:GILD)

Capital Asset Pricing Model (CAPM)

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

Rates of Return
Variance and Covariance
Systematic Risk (β) Estimation
Expected Rate of Return

Rates of Return

Gilead Sciences Inc., monthly rates of return

		Gilead Sciences Inc. (GILD)			Standard & Poor’s 500 (S&P 500)
t	Date	Price_GILD,t¹	Dividend_GILD,t¹	R_GILD,t²	Price_{S&P 500,t}	R_{S&P 500,t}³
	Jan 31, 2021	$65.60			3,714.24
1.	Feb 28, 2021	$61.40		-6.40%	3,811.15	2.61%
2.	Mar 31, 2021	$64.63	$0.71	6.42%	3,972.89	4.24%
3.	Apr 30, 2021	$63.47		-1.79%	4,181.17	5.24%
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58.	Nov 30, 2025	$125.84		5.05%	6,849.09	0.13%
59.	Dec 31, 2025	$122.74	$0.79	-1.84%	6,845.50	-0.05%
Average (R):				1.60%		1.14%
Standard deviation:				6.57%		4.37%

		Gilead Sciences Inc. (GILD)			Standard & Poor’s 500 (S&P 500)
t	Date	Price_GILD,t¹	Dividend_GILD,t¹	R_GILD,t²	Price_{S&P 500,t}	R_{S&P 500,t}³
	Jan 31, 2021	$65.60			3,714.24
1.	Feb 28, 2021	$61.40		-6.40%	3,811.15	2.61%
2.	Mar 31, 2021	$64.63	$0.71	6.42%	3,972.89	4.24%
3.	Apr 30, 2021	$63.47		-1.79%	4,181.17	5.24%
4.	May 31, 2021	$66.11		4.16%	4,204.11	0.55%
5.	Jun 30, 2021	$68.86	$0.71	5.23%	4,297.50	2.22%
6.	Jul 31, 2021	$68.29		-0.83%	4,395.26	2.27%
7.	Aug 31, 2021	$72.78		6.57%	4,522.68	2.90%
8.	Sep 30, 2021	$69.85	$0.71	-3.05%	4,307.54	-4.76%
9.	Oct 31, 2021	$64.88		-7.12%	4,605.38	6.91%
10.	Nov 30, 2021	$68.93		6.24%	4,567.00	-0.83%
11.	Dec 31, 2021	$72.61	$0.71	6.37%	4,766.18	4.36%
12.	Jan 31, 2022	$68.68		-5.41%	4,515.55	-5.26%
13.	Feb 28, 2022	$60.40		-12.06%	4,373.94	-3.14%
14.	Mar 31, 2022	$59.45	$0.73	-0.36%	4,530.41	3.58%
15.	Apr 30, 2022	$59.34		-0.19%	4,131.93	-8.80%
16.	May 31, 2022	$64.85		9.29%	4,132.15	0.01%
17.	Jun 30, 2022	$61.81	$0.73	-3.56%	3,785.38	-8.39%
18.	Jul 31, 2022	$59.75		-3.33%	4,130.29	9.11%
19.	Aug 31, 2022	$63.47		6.23%	3,955.00	-4.24%
20.	Sep 30, 2022	$61.69	$0.73	-1.65%	3,585.62	-9.34%
21.	Oct 31, 2022	$78.46		27.18%	3,871.98	7.99%
22.	Nov 30, 2022	$87.83		11.94%	4,080.11	5.38%
23.	Dec 31, 2022	$85.85	$0.73	-1.42%	3,839.50	-5.90%
24.	Jan 31, 2023	$83.94		-2.22%	4,076.60	6.18%
25.	Feb 28, 2023	$80.53		-4.06%	3,970.15	-2.61%
26.	Mar 31, 2023	$82.97	$0.75	3.96%	4,109.31	3.51%
27.	Apr 30, 2023	$82.21		-0.92%	4,169.48	1.46%
28.	May 31, 2023	$76.94		-6.41%	4,179.83	0.25%
29.	Jun 30, 2023	$77.07	$0.75	1.14%	4,376.86	4.71%
30.	Jul 31, 2023	$76.14		-1.21%	4,588.96	4.85%
31.	Aug 31, 2023	$76.48		0.45%	4,507.66	-1.77%
32.	Sep 30, 2023	$74.94	$0.75	-1.03%	4,288.05	-4.87%
33.	Oct 31, 2023	$78.54		4.80%	4,193.80	-2.20%
34.	Nov 30, 2023	$76.60		-2.47%	4,567.80	8.92%
35.	Dec 31, 2023	$81.01	$0.75	6.74%	4,769.83	4.42%
36.	Jan 31, 2024	$78.26		-3.39%	4,845.65	1.59%
37.	Feb 29, 2024	$72.10		-7.87%	5,096.27	5.17%
38.	Mar 31, 2024	$73.25	$0.77	2.66%	5,254.35	3.10%
39.	Apr 30, 2024	$65.20		-10.99%	5,035.69	-4.16%
40.	May 31, 2024	$64.27		-1.43%	5,277.51	4.80%
41.	Jun 30, 2024	$68.61	$0.77	7.95%	5,460.48	3.47%
42.	Jul 31, 2024	$76.06		10.86%	5,522.30	1.13%
43.	Aug 31, 2024	$79.00		3.87%	5,648.40	2.28%
44.	Sep 30, 2024	$83.84	$0.77	7.10%	5,762.48	2.02%
45.	Oct 31, 2024	$88.82		5.94%	5,705.45	-0.99%
46.	Nov 30, 2024	$92.58		4.23%	6,032.38	5.73%
47.	Dec 31, 2024	$92.37	$0.77	0.60%	5,881.63	-2.50%
48.	Jan 31, 2025	$97.20		5.23%	6,040.53	2.70%
49.	Feb 28, 2025	$114.31		17.60%	5,954.50	-1.42%
50.	Mar 31, 2025	$112.05	$0.79	-1.29%	5,611.85	-5.75%
51.	Apr 30, 2025	$106.54		-4.92%	5,569.06	-0.76%
52.	May 31, 2025	$110.08		3.32%	5,911.69	6.15%
53.	Jun 30, 2025	$110.87	$0.79	1.44%	6,204.95	4.96%
54.	Jul 31, 2025	$112.29		1.28%	6,339.39	2.17%
55.	Aug 31, 2025	$112.97		0.61%	6,460.26	1.91%
56.	Sep 30, 2025	$111.00	$0.79	-1.04%	6,688.46	3.53%
57.	Oct 31, 2025	$119.79		7.92%	6,840.20	2.27%
58.	Nov 30, 2025	$125.84		5.05%	6,849.09	0.13%
59.	Dec 31, 2025	$122.74	$0.79	-1.84%	6,845.50	-0.05%
Average (R):				1.60%		1.14%
Standard deviation:				6.57%		4.37%

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 GILD during period t

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

Variance and Covariance

Gilead Sciences Inc., calculation of variance and covariance of returns

t	Date	R_GILD,t	R_{S&P 500,t}	(R_GILD,t–R_GILD)²	(R_{S&P 500,t}–R_{S&P 500})²	(R_GILD,t–R_GILD)×(R_{S&P 500,t}–R_{S&P 500})
1.	Feb 28, 2021	-6.40%	2.61%	63.96	2.17	-11.78
2.	Mar 31, 2021	6.42%	4.24%	23.25	9.66	14.98
3.	Apr 30, 2021	-1.79%	5.24%	11.49	16.86	-13.92
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58.	Nov 30, 2025	5.05%	0.13%	11.94	1.01	-3.48
59.	Dec 31, 2025	-1.84%	-0.05%	11.77	1.41	4.08
Total (Σ):				2,505.20	1,108.23	394.52

t	Date	R_GILD,t	R_{S&P 500,t}	(R_GILD,t–R_GILD)²	(R_{S&P 500,t}–R_{S&P 500})²	(R_GILD,t–R_GILD)×(R_{S&P 500,t}–R_{S&P 500})
1.	Feb 28, 2021	-6.40%	2.61%	63.96	2.17	-11.78
2.	Mar 31, 2021	6.42%	4.24%	23.25	9.66	14.98
3.	Apr 30, 2021	-1.79%	5.24%	11.49	16.86	-13.92
4.	May 31, 2021	4.16%	0.55%	6.58	0.35	-1.51
5.	Jun 30, 2021	5.23%	2.22%	13.24	1.18	3.95
6.	Jul 31, 2021	-0.83%	2.27%	5.87	1.30	-2.76
7.	Aug 31, 2021	6.57%	2.90%	24.80	3.11	8.78
8.	Sep 30, 2021	-3.05%	-4.76%	21.58	34.73	27.38
9.	Oct 31, 2021	-7.12%	6.91%	75.87	33.39	-50.33
10.	Nov 30, 2021	6.24%	-0.83%	21.60	3.88	-9.15
11.	Dec 31, 2021	6.37%	4.36%	22.79	10.40	15.40
12.	Jan 31, 2022	-5.41%	-5.26%	49.11	40.89	44.81
13.	Feb 28, 2022	-12.06%	-3.14%	186.35	18.25	58.32
14.	Mar 31, 2022	-0.36%	3.58%	3.84	5.96	-4.78
15.	Apr 30, 2022	-0.19%	-8.80%	3.17	98.64	17.68
16.	May 31, 2022	9.29%	0.01%	59.14	1.28	-8.70
17.	Jun 30, 2022	-3.56%	-8.39%	26.60	90.79	49.14
18.	Jul 31, 2022	-3.33%	9.11%	24.29	63.61	-39.30
19.	Aug 31, 2022	6.23%	-4.24%	21.44	28.95	-24.91
20.	Sep 30, 2022	-1.65%	-9.34%	10.56	109.74	34.04
21.	Oct 31, 2022	27.18%	7.99%	654.80	46.93	175.29
22.	Nov 30, 2022	11.94%	5.38%	107.06	17.97	43.86
23.	Dec 31, 2022	-1.42%	-5.90%	9.11	49.47	21.23
24.	Jan 31, 2023	-2.22%	6.18%	14.59	25.39	-19.25
25.	Feb 28, 2023	-4.06%	-2.61%	32.01	14.04	21.20
26.	Mar 31, 2023	3.96%	3.51%	5.60	5.61	5.61
27.	Apr 30, 2023	-0.92%	1.46%	6.31	0.11	-0.82
28.	May 31, 2023	-6.41%	0.25%	64.09	0.79	7.11
29.	Jun 30, 2023	1.14%	4.71%	0.20	12.80	-1.62
30.	Jul 31, 2023	-1.21%	4.85%	7.85	13.76	-10.39
31.	Aug 31, 2023	0.45%	-1.77%	1.32	8.46	3.34
32.	Sep 30, 2023	-1.03%	-4.87%	6.91	36.10	15.79
33.	Oct 31, 2023	4.80%	-2.20%	10.30	11.12	-10.70
34.	Nov 30, 2023	-2.47%	8.92%	16.53	60.56	-31.64
35.	Dec 31, 2023	6.74%	4.42%	26.43	10.80	16.90
36.	Jan 31, 2024	-3.39%	1.59%	24.90	0.21	-2.26
37.	Feb 29, 2024	-7.87%	5.17%	89.61	16.29	-38.21
38.	Mar 31, 2024	2.66%	3.10%	1.14	3.86	2.10
39.	Apr 30, 2024	-10.99%	-4.16%	158.38	28.06	66.67
40.	May 31, 2024	-1.43%	4.80%	9.13	13.44	-11.08
41.	Jun 30, 2024	7.95%	3.47%	40.39	5.43	14.81
42.	Jul 31, 2024	10.86%	1.13%	85.81	0.00	-0.04
43.	Aug 31, 2024	3.87%	2.28%	5.15	1.32	2.60
44.	Sep 30, 2024	7.10%	2.02%	30.32	0.78	4.86
45.	Oct 31, 2024	5.94%	-0.99%	18.88	4.52	-9.24
46.	Nov 30, 2024	4.23%	5.73%	6.96	21.10	12.12
47.	Dec 31, 2024	0.60%	-2.50%	0.98	13.21	3.60
48.	Jan 31, 2025	5.23%	2.70%	13.20	2.45	5.69
49.	Feb 28, 2025	17.60%	-1.42%	256.24	6.56	-40.99
50.	Mar 31, 2025	-1.29%	-5.75%	8.30	47.48	19.85
51.	Apr 30, 2025	-4.92%	-0.76%	42.42	3.60	12.37
52.	May 31, 2025	3.32%	6.15%	2.98	25.16	8.67
53.	Jun 30, 2025	1.44%	4.96%	0.03	14.63	-0.61
54.	Jul 31, 2025	1.28%	2.17%	0.10	1.06	-0.32
55.	Aug 31, 2025	0.61%	1.91%	0.98	0.59	-0.76
56.	Sep 30, 2025	-1.04%	3.53%	6.97	5.74	-6.33
57.	Oct 31, 2025	7.92%	2.27%	39.99	1.28	7.16
58.	Nov 30, 2025	5.05%	0.13%	11.94	1.01	-3.48
59.	Dec 31, 2025	-1.84%	-0.05%	11.77	1.41	4.08
Total (Σ):				2,505.20	1,108.23	394.52

Show all

Variance_GILD = Σ(R_GILD,t–R_GILD)² ÷ (59 – 1)
= 2,505.20 ÷ (59 – 1)
= 43.19

Variance_{S&P 500} = Σ(R_{S&P 500,t}–R_{S&P 500})² ÷ (59 – 1)
= 1,108.23 ÷ (59 – 1)
= 19.11

Covariance_{GILD, S&P 500} = Σ(R_GILD,t–R_GILD)×(R_{S&P 500,t}–R_{S&P 500}) ÷ (59 – 1)
= 394.52 ÷ (59 – 1)
= 6.80

Systematic Risk (β) Estimation

Variance_GILD	43.19
Variance_{S&P 500}	19.11
Covariance_{GILD, S&P 500}	6.80
Correlation coefficient_{GILD, S&P 500}¹	0.24
β_GILD²	0.36
α_GILD³	1.19%

Calculations

¹ Correlation coefficient_{GILD, S&P 500}
= Covariance_{GILD, S&P 500} ÷ (Standard deviation_GILD × Standard deviation_{S&P 500})
= 6.80 ÷ (6.57% × 4.37%)
= 0.24

² β_GILD
= Covariance_{GILD, S&P 500} ÷ Variance_{S&P 500}
= 6.80 ÷ 19.11
= 0.36

³ α_GILD
= Average_GILD – β_GILD × Average_{S&P 500}
= 1.60% – 0.36 × 1.14%
= 1.19%

Expected Rate of Return

Assumptions
Rate of return on LT Treasury Composite¹	R_F	4.54%
Expected rate of return on market portfolio²	E(R_M)	17.37%
Systematic risk (β) of Gilead Sciences Inc. common stock	β_GILD	0.36

Expected rate of return on Gilead Sciences Inc. common stock³	E(R_GILD)	9.11%

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(R_GILD) = R_F + β_GILD [E(R_M) – R_F]
= 4.54% + 0.36 [17.37% – 4.54%]
= 9.11%