Stock Analysis on Net
Stock Analysis on Net

Walmart Inc. (NYSE:WMT)

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Capital Asset Pricing Model (CAPM)

Microsoft Excel LibreOffice Calc

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


Rates of Return

Walmart Inc., monthly rates of return

Microsoft Excel LibreOffice Calc
Walmart Inc. (WMT) Standard & Poor’s 500 (S&P 500)
t Date PriceWMT,t1 DividendWMT,t1 RWMT,t2 PriceS&P 500,t RS&P 500,t3
Feb 28, 2015
1. Mar 31, 2015
2. Apr 30, 2015
3. May 31, 2015
. . . . . . .
. . . . . . .
. . . . . . .
70. Dec 31, 2020
71. Jan 31, 2021
Average (R):
Standard deviation:
Walmart Inc. (WMT) Standard & Poor’s 500 (S&P 500)
t Date PriceWMT,t1 DividendWMT,t1 RWMT,t2 PriceS&P 500,t RS&P 500,t3
Feb 28, 2015
1. Mar 31, 2015
2. Apr 30, 2015
3. May 31, 2015
4. Jun 30, 2015
5. Jul 31, 2015
6. Aug 31, 2015
7. Sep 30, 2015
8. Oct 31, 2015
9. Nov 30, 2015
10. Dec 31, 2015
11. Jan 31, 2016
12. Feb 29, 2016
13. Mar 31, 2016
14. Apr 30, 2016
15. May 31, 2016
16. Jun 30, 2016
17. Jul 31, 2016
18. Aug 31, 2016
19. Sep 30, 2016
20. Oct 31, 2016
21. Nov 30, 2016
22. Dec 31, 2016
23. Jan 31, 2017
24. Feb 28, 2017
25. Mar 31, 2017
26. Apr 30, 2017
27. May 31, 2017
28. Jun 30, 2017
29. Jul 31, 2017
30. Aug 31, 2017
31. Sep 30, 2017
32. Oct 31, 2017
33. Nov 30, 2017
34. Dec 31, 2017
35. Jan 31, 2018
36. Feb 28, 2018
37. Mar 31, 2018
38. Apr 30, 2018
39. May 31, 2018
40. Jun 30, 2018
41. Jul 31, 2018
42. Aug 31, 2018
43. Sep 30, 2018
44. Oct 31, 2018
45. Nov 30, 2018
46. Dec 31, 2018
47. Jan 31, 2019
48. Feb 28, 2019
49. Mar 31, 2019
50. Apr 30, 2019
51. May 31, 2019
52. Jun 30, 2019
53. Jul 31, 2019
54. Aug 31, 2019
55. Sep 30, 2019
56. Oct 31, 2019
57. Nov 30, 2019
58. Dec 31, 2019
59. Jan 31, 2020
60. Feb 29, 2020
61. Mar 31, 2020
62. Apr 30, 2020
63. May 31, 2020
64. Jun 30, 2020
65. Jul 31, 2020
66. Aug 31, 2020
67. Sep 30, 2020
68. Oct 31, 2020
69. Nov 30, 2020
70. Dec 31, 2020
71. Jan 31, 2021
Average (R):
Standard deviation:

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 WMT during period t

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


Variance and Covariance

Walmart Inc., calculation of variance and covariance of returns

Microsoft Excel LibreOffice Calc
t Date RWMT,t RS&P 500,t (RWMT,tRWMT)2 (RS&P 500,tRS&P 500)2 (RWMT,tRWMT)×(RS&P 500,tRS&P 500)
1. Mar 31, 2015
2. Apr 30, 2015
3. May 31, 2015
. . . . . . .
. . . . . . .
. . . . . . .
70. Dec 31, 2020
71. Jan 31, 2021
Total (Σ):
t Date RWMT,t RS&P 500,t (RWMT,tRWMT)2 (RS&P 500,tRS&P 500)2 (RWMT,tRWMT)×(RS&P 500,tRS&P 500)
1. Mar 31, 2015
2. Apr 30, 2015
3. May 31, 2015
4. Jun 30, 2015
5. Jul 31, 2015
6. Aug 31, 2015
7. Sep 30, 2015
8. Oct 31, 2015
9. Nov 30, 2015
10. Dec 31, 2015
11. Jan 31, 2016
12. Feb 29, 2016
13. Mar 31, 2016
14. Apr 30, 2016
15. May 31, 2016
16. Jun 30, 2016
17. Jul 31, 2016
18. Aug 31, 2016
19. Sep 30, 2016
20. Oct 31, 2016
21. Nov 30, 2016
22. Dec 31, 2016
23. Jan 31, 2017
24. Feb 28, 2017
25. Mar 31, 2017
26. Apr 30, 2017
27. May 31, 2017
28. Jun 30, 2017
29. Jul 31, 2017
30. Aug 31, 2017
31. Sep 30, 2017
32. Oct 31, 2017
33. Nov 30, 2017
34. Dec 31, 2017
35. Jan 31, 2018
36. Feb 28, 2018
37. Mar 31, 2018
38. Apr 30, 2018
39. May 31, 2018
40. Jun 30, 2018
41. Jul 31, 2018
42. Aug 31, 2018
43. Sep 30, 2018
44. Oct 31, 2018
45. Nov 30, 2018
46. Dec 31, 2018
47. Jan 31, 2019
48. Feb 28, 2019
49. Mar 31, 2019
50. Apr 30, 2019
51. May 31, 2019
52. Jun 30, 2019
53. Jul 31, 2019
54. Aug 31, 2019
55. Sep 30, 2019
56. Oct 31, 2019
57. Nov 30, 2019
58. Dec 31, 2019
59. Jan 31, 2020
60. Feb 29, 2020
61. Mar 31, 2020
62. Apr 30, 2020
63. May 31, 2020
64. Jun 30, 2020
65. Jul 31, 2020
66. Aug 31, 2020
67. Sep 30, 2020
68. Oct 31, 2020
69. Nov 30, 2020
70. Dec 31, 2020
71. Jan 31, 2021
Total (Σ):

Show all

VarianceWMT = Σ(RWMT,tRWMT)2 ÷ (71 – 1)
= ÷ (71 – 1)
=

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

CovarianceWMT, S&P 500 = Σ(RWMT,tRWMT)×(RS&P 500,tRS&P 500) ÷ (71 – 1)
= ÷ (71 – 1)
=


Systematic Risk (β) Estimation

Microsoft Excel LibreOffice Calc
VarianceWMT
VarianceS&P 500
CovarianceWMT, S&P 500
Correlation coefficientWMT, S&P 5001
βWMT2
αWMT3

Calculations

1 Correlation coefficientWMT, S&P 500
= CovarianceWMT, S&P 500 ÷ (Standard deviationWMT × Standard deviationS&P 500)
= ÷ ( × )
=

2 βWMT
= CovarianceWMT, S&P 500 ÷ VarianceS&P 500
= ÷
=

3 αWMT
= AverageWMT – βWMT × AverageS&P 500
= ×
=


Expected Rate of Return

Microsoft Excel LibreOffice Calc
Assumptions
Rate of return on LT Treasury Composite1 RF
Expected rate of return on market portfolio2 E(RM)
Systematic risk (β) of Walmart Inc.’s common stock βWMT
 
Expected rate of return on Walmart Inc.’s common stock3 E(RWMT)

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(RWMT) = RF + βWMT [E(RM) – RF]
= + []
=