Stock Analysis on Net

Salesforce Inc. (NYSE:CRM)

Capital Asset Pricing Model (CAPM)

Microsoft Excel

Rates of Return

Salesforce Inc., monthly rates of return

Microsoft Excel
Salesforce Inc. (CRM) Standard & Poor’s 500 (S&P 500)
t Date PriceCRM,t1 DividendCRM,t1 RCRM,t2 PriceS&P 500,t RS&P 500,t3
Feb 29, 2016 $67.75 1,932.23
1. Mar 31, 2016 $73.83 8.97% 2,059.74 6.60%
2. Apr 30, 2016 $75.80 2.67% 2,065.30 0.27%
3. May 31, 2016 $83.71 10.44% 2,096.95 1.53%
. . . . . . .
. . . . . . .
. . . . . . .
70. Dec 31, 2021 $254.13 -10.82% 4,766.18 4.36%
71. Jan 31, 2022 $232.63 -8.46% 4,515.55 -5.26%
Average (R): 2.06% 1.29%
Standard deviation: 8.11% 4.25%
Salesforce Inc. (CRM) Standard & Poor’s 500 (S&P 500)
t Date PriceCRM,t1 DividendCRM,t1 RCRM,t2 PriceS&P 500,t RS&P 500,t3
Feb 29, 2016 $67.75 1,932.23
1. Mar 31, 2016 $73.83 8.97% 2,059.74 6.60%
2. Apr 30, 2016 $75.80 2.67% 2,065.30 0.27%
3. May 31, 2016 $83.71 10.44% 2,096.95 1.53%
4. Jun 30, 2016 $79.41 -5.14% 2,098.86 0.09%
5. Jul 31, 2016 $81.80 3.01% 2,173.60 3.56%
6. Aug 31, 2016 $79.42 -2.91% 2,170.95 -0.12%
7. Sep 30, 2016 $71.33 -10.19% 2,168.27 -0.12%
8. Oct 31, 2016 $75.16 5.37% 2,126.15 -1.94%
9. Nov 30, 2016 $72.00 -4.20% 2,198.81 3.42%
10. Dec 31, 2016 $68.46 -4.92% 2,238.83 1.82%
11. Jan 31, 2017 $79.10 15.54% 2,278.87 1.79%
12. Feb 28, 2017 $81.35 2.84% 2,363.64 3.72%
13. Mar 31, 2017 $82.49 1.40% 2,362.72 -0.04%
14. Apr 30, 2017 $86.12 4.40% 2,384.20 0.91%
15. May 31, 2017 $89.64 4.09% 2,411.80 1.16%
16. Jun 30, 2017 $86.60 -3.39% 2,423.41 0.48%
17. Jul 31, 2017 $90.80 4.85% 2,470.30 1.93%
18. Aug 31, 2017 $95.49 5.17% 2,471.65 0.05%
19. Sep 30, 2017 $93.42 -2.17% 2,519.36 1.93%
20. Oct 31, 2017 $102.34 9.55% 2,575.26 2.22%
21. Nov 30, 2017 $104.32 1.93% 2,647.58 2.81%
22. Dec 31, 2017 $102.23 -2.00% 2,673.61 0.98%
23. Jan 31, 2018 $113.91 11.43% 2,823.81 5.62%
24. Feb 28, 2018 $116.25 2.05% 2,713.83 -3.89%
25. Mar 31, 2018 $116.30 0.04% 2,640.87 -2.69%
26. Apr 30, 2018 $120.99 4.03% 2,648.05 0.27%
27. May 31, 2018 $129.33 6.89% 2,705.27 2.16%
28. Jun 30, 2018 $136.40 5.47% 2,718.37 0.48%
29. Jul 31, 2018 $137.15 0.55% 2,816.29 3.60%
30. Aug 31, 2018 $152.68 11.32% 2,901.52 3.03%
31. Sep 30, 2018 $159.03 4.16% 2,913.98 0.43%
32. Oct 31, 2018 $137.24 -13.70% 2,711.74 -6.94%
33. Nov 30, 2018 $142.76 4.02% 2,760.17 1.79%
34. Dec 31, 2018 $136.97 -4.06% 2,506.85 -9.18%
35. Jan 31, 2019 $151.97 10.95% 2,704.10 7.87%
36. Feb 28, 2019 $163.65 7.69% 2,784.49 2.97%
37. Mar 31, 2019 $158.37 -3.23% 2,834.40 1.79%
38. Apr 30, 2019 $165.35 4.41% 2,945.83 3.93%
39. May 31, 2019 $151.41 -8.43% 2,752.06 -6.58%
40. Jun 30, 2019 $151.73 0.21% 2,941.76 6.89%
41. Jul 31, 2019 $154.50 1.83% 2,980.38 1.31%
42. Aug 31, 2019 $156.07 1.02% 2,926.46 -1.81%
43. Sep 30, 2019 $148.44 -4.89% 2,976.74 1.72%
44. Oct 31, 2019 $156.49 5.42% 3,037.56 2.04%
45. Nov 30, 2019 $162.89 4.09% 3,140.98 3.40%
46. Dec 31, 2019 $162.64 -0.15% 3,230.78 2.86%
47. Jan 31, 2020 $182.31 12.09% 3,225.52 -0.16%
48. Feb 29, 2020 $170.40 -6.53% 2,954.22 -8.41%
49. Mar 31, 2020 $143.98 -15.50% 2,584.59 -12.51%
50. Apr 30, 2020 $161.95 12.48% 2,912.43 12.68%
51. May 31, 2020 $174.79 7.93% 3,044.31 4.53%
52. Jun 30, 2020 $187.33 7.17% 3,100.29 1.84%
53. Jul 31, 2020 $194.85 4.01% 3,271.12 5.51%
54. Aug 31, 2020 $272.65 39.93% 3,500.31 7.01%
55. Sep 30, 2020 $251.32 -7.82% 3,363.00 -3.92%
56. Oct 31, 2020 $232.27 -7.58% 3,269.96 -2.77%
57. Nov 30, 2020 $245.80 5.83% 3,621.63 10.75%
58. Dec 31, 2020 $222.53 -9.47% 3,756.07 3.71%
59. Jan 31, 2021 $225.56 1.36% 3,714.24 -1.11%
60. Feb 28, 2021 $216.50 -4.02% 3,811.15 2.61%
61. Mar 31, 2021 $211.87 -2.14% 3,972.89 4.24%
62. Apr 30, 2021 $230.32 8.71% 4,181.17 5.24%
63. May 31, 2021 $238.10 3.38% 4,204.11 0.55%
64. Jun 30, 2021 $244.27 2.59% 4,297.50 2.22%
65. Jul 31, 2021 $241.93 -0.96% 4,395.26 2.27%
66. Aug 31, 2021 $265.27 9.65% 4,522.68 2.90%
67. Sep 30, 2021 $271.22 2.24% 4,307.54 -4.76%
68. Oct 31, 2021 $299.69 10.50% 4,605.38 6.91%
69. Nov 30, 2021 $284.96 -4.92% 4,567.00 -0.83%
70. Dec 31, 2021 $254.13 -10.82% 4,766.18 4.36%
71. Jan 31, 2022 $232.63 -8.46% 4,515.55 -5.26%
Average (R): 2.06% 1.29%
Standard deviation: 8.11% 4.25%

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 CRM during period t

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


Variance and Covariance

Salesforce Inc., calculation of variance and covariance of returns

Microsoft Excel
t Date RCRM,t RS&P 500,t (RCRM,tRCRM)2 (RS&P 500,tRS&P 500)2 (RCRM,tRCRM)×(RS&P 500,tRS&P 500)
1. Mar 31, 2016 8.97% 6.60% 47.84 28.16 36.71
2. Apr 30, 2016 2.67% 0.27% 0.37 1.05 -0.62
3. May 31, 2016 10.44% 1.53% 70.19 0.06 2.01
. . . . . . .
. . . . . . .
. . . . . . .
70. Dec 31, 2021 -10.82% 4.36% 165.81 9.42 -39.52
71. Jan 31, 2022 -8.46% -5.26% 110.63 42.91 68.90
Total (Σ): 4,606.83 1,262.70 1,343.96
t Date RCRM,t RS&P 500,t (RCRM,tRCRM)2 (RS&P 500,tRS&P 500)2 (RCRM,tRCRM)×(RS&P 500,tRS&P 500)
1. Mar 31, 2016 8.97% 6.60% 47.84 28.16 36.71
2. Apr 30, 2016 2.67% 0.27% 0.37 1.05 -0.62
3. May 31, 2016 10.44% 1.53% 70.19 0.06 2.01
4. Jun 30, 2016 -5.14% 0.09% 51.76 1.44 8.64
5. Jul 31, 2016 3.01% 3.56% 0.91 5.15 2.16
6. Aug 31, 2016 -2.91% -0.12% 24.67 2.00 7.02
7. Sep 30, 2016 -10.19% -0.12% 149.92 2.00 17.33
8. Oct 31, 2016 5.37% -1.94% 10.97 10.46 -10.71
9. Nov 30, 2016 -4.20% 3.42% 39.21 4.52 -13.31
10. Dec 31, 2016 -4.92% 1.82% 48.64 0.28 -3.68
11. Jan 31, 2017 15.54% 1.79% 181.83 0.25 6.69
12. Feb 28, 2017 2.84% 3.72% 0.62 5.89 1.91
13. Mar 31, 2017 1.40% -0.04% 0.43 1.77 0.87
14. Apr 30, 2017 4.40% 0.91% 5.49 0.15 -0.90
15. May 31, 2017 4.09% 1.16% 4.12 0.02 -0.27
16. Jun 30, 2017 -3.39% 0.48% 29.69 0.66 4.42
17. Jul 31, 2017 4.85% 1.93% 7.80 0.41 1.79
18. Aug 31, 2017 5.17% 0.05% 9.66 1.53 -3.85
19. Sep 30, 2017 -2.17% 1.93% 17.85 0.41 -2.70
20. Oct 31, 2017 9.55% 2.22% 56.11 0.86 6.94
21. Nov 30, 2017 1.93% 2.81% 0.02 2.30 -0.19
22. Dec 31, 2017 -2.00% 0.98% 16.49 0.10 1.26
23. Jan 31, 2018 11.43% 5.62% 87.75 18.71 40.52
24. Feb 28, 2018 2.05% -3.89% 0.00 26.90 0.02
25. Mar 31, 2018 0.04% -2.69% 4.06 15.85 8.02
26. Apr 30, 2018 4.03% 0.27% 3.90 1.04 -2.02
27. May 31, 2018 6.89% 2.16% 23.38 0.75 4.20
28. Jun 30, 2018 5.47% 0.48% 11.62 0.65 -2.75
29. Jul 31, 2018 0.55% 3.60% 2.27 5.34 -3.48
30. Aug 31, 2018 11.32% 3.03% 85.85 3.01 16.07
31. Sep 30, 2018 4.16% 0.43% 4.42 0.74 -1.81
32. Oct 31, 2018 -13.70% -6.94% 248.36 67.78 129.74
33. Nov 30, 2018 4.02% 1.79% 3.86 0.24 0.97
34. Dec 31, 2018 -4.06% -9.18% 37.37 109.62 64.01
35. Jan 31, 2019 10.95% 7.87% 79.10 43.25 58.49
36. Feb 28, 2019 7.69% 2.97% 31.68 2.82 9.46
37. Mar 31, 2019 -3.23% 1.79% 27.92 0.25 -2.64
38. Apr 30, 2019 4.41% 3.93% 5.52 6.96 6.20
39. May 31, 2019 -8.43% -6.58% 110.00 61.94 82.54
40. Jun 30, 2019 0.21% 6.89% 3.41 31.37 -10.34
41. Jul 31, 2019 1.83% 1.31% 0.05 0.00 0.00
42. Aug 31, 2019 1.02% -1.81% 1.08 9.62 3.23
43. Sep 30, 2019 -4.89% 1.72% 48.25 0.18 -2.96
44. Oct 31, 2019 5.42% 2.04% 11.33 0.56 2.53
45. Nov 30, 2019 4.09% 3.40% 4.13 4.46 4.29
46. Dec 31, 2019 -0.15% 2.86% 4.89 2.45 -3.46
47. Jan 31, 2020 12.09% -0.16% 100.73 2.12 -14.60
48. Feb 29, 2020 -6.53% -8.41% 73.80 94.15 83.36
49. Mar 31, 2020 -15.50% -12.51% 308.44 190.56 242.43
50. Apr 30, 2020 12.48% 12.68% 108.64 129.78 118.74
51. May 31, 2020 7.93% 4.53% 34.47 10.47 19.00
52. Jun 30, 2020 7.17% 1.84% 26.18 0.30 2.80
53. Jul 31, 2020 4.01% 5.51% 3.83 17.79 8.25
54. Aug 31, 2020 39.93% 7.01% 1,434.17 32.65 216.40
55. Sep 30, 2020 -7.82% -3.92% 97.63 27.20 51.53
56. Oct 31, 2020 -7.58% -2.77% 92.88 16.47 39.12
57. Nov 30, 2020 5.83% 10.75% 14.19 89.54 35.65
58. Dec 31, 2020 -9.47% 3.71% 132.82 5.86 -27.89
59. Jan 31, 2021 1.36% -1.11% 0.48 5.79 1.67
60. Feb 28, 2021 -4.02% 2.61% 36.90 1.73 -8.00
61. Mar 31, 2021 -2.14% 4.24% 17.61 8.71 -12.39
62. Apr 30, 2021 8.71% 5.24% 44.23 15.60 26.27
63. May 31, 2021 3.38% 0.55% 1.74 0.55 -0.98
64. Jun 30, 2021 2.59% 2.22% 0.28 0.86 0.50
65. Jul 31, 2021 -0.96% 2.27% 9.09 0.97 -2.96
66. Aug 31, 2021 9.65% 2.90% 57.60 2.58 12.20
67. Sep 30, 2021 2.24% -4.76% 0.03 36.59 -1.12
68. Oct 31, 2021 10.50% 6.91% 71.22 31.61 47.45
69. Nov 30, 2021 -4.92% -0.83% 48.62 4.52 14.82
70. Dec 31, 2021 -10.82% 4.36% 165.81 9.42 -39.52
71. Jan 31, 2022 -8.46% -5.26% 110.63 42.91 68.90
Total (Σ): 4,606.83 1,262.70 1,343.96

Show all

VarianceCRM = Σ(RCRM,tRCRM)2 ÷ (71 – 1)
= 4,606.83 ÷ (71 – 1)
= 65.81

VarianceS&P 500 = Σ(RS&P 500,tRS&P 500)2 ÷ (71 – 1)
= 1,262.70 ÷ (71 – 1)
= 18.04

CovarianceCRM, S&P 500 = Σ(RCRM,tRCRM)×(RS&P 500,tRS&P 500) ÷ (71 – 1)
= 1,343.96 ÷ (71 – 1)
= 19.20


Systematic Risk (β) Estimation

Microsoft Excel
VarianceCRM 65.81
VarianceS&P 500 18.04
CovarianceCRM, S&P 500 19.20
Correlation coefficientCRM, S&P 5001 0.56
βCRM2 1.06
αCRM3 0.68%

Calculations

1 Correlation coefficientCRM, S&P 500
= CovarianceCRM, S&P 500 ÷ (Standard deviationCRM × Standard deviationS&P 500)
= 19.20 ÷ (8.11% × 4.25%)
= 0.56

2 βCRM
= CovarianceCRM, S&P 500 ÷ VarianceS&P 500
= 19.20 ÷ 18.04
= 1.06

3 αCRM
= AverageCRM – βCRM × AverageS&P 500
= 2.06%1.06 × 1.29%
= 0.68%


Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 3.99%
Expected rate of return on market portfolio2 E(RM) 12.76%
Systematic risk (β) of Salesforce Inc. common stock βCRM 1.06
 
Expected rate of return on Salesforce Inc. common stock3 E(RCRM) 13.32%

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(RCRM) = RF + βCRM [E(RM) – RF]
= 3.99% + 1.06 [12.76%3.99%]
= 13.32%