502 Words3 Pages

Fin 360 Write Up
Professor Ullrich
Dec 6, 2013
After importing both tables consisting of data from the GXP Company and the S&P 500, I merged them to calculate and see if electricity price variation helps determine the stock price for those companies who operate in that market. I calculated the excess returns first by simply subtracting the risk free rate from both the S&P 500 return and the GXP return which produced the independent and dependent variables. I performed a linear regression with the excess return on GXP as the dependent variable and the excess return on the S&P 500 being the independent variable. After completing the regression it turns out that the excess return on the market explains very little of the excess return on the GXP stock with the r-squared being only 14.4%, which is the*…show more content…*

The remaining 85.6% of GXP stock excess return variation is the nonsystematic component. The beta for GXP is .45 which is its sensitivity to movements in the market and means that the excess return on the market is positively correlated with the excess return on GXP. It moves in same direction as market at large but less susceptible to day-to-day fluctuations. Since this number is less than one its risk is lower than that of the market. As shown in the fit put charts the S&P500 and GXP returns can be proven to be positively correlated by looking at the line of best fit with the data shown. The standard error is low as well being at 2.92%. The intercept or alpha in this regression is .0001809 which is not significantly different from zero. The t value is 15.56 which is greater than the t stat for a 5% significance level and the p value is less than .0001 which is the

The remaining 85.6% of GXP stock excess return variation is the nonsystematic component. The beta for GXP is .45 which is its sensitivity to movements in the market and means that the excess return on the market is positively correlated with the excess return on GXP. It moves in same direction as market at large but less susceptible to day-to-day fluctuations. Since this number is less than one its risk is lower than that of the market. As shown in the fit put charts the S&P500 and GXP returns can be proven to be positively correlated by looking at the line of best fit with the data shown. The standard error is low as well being at 2.92%. The intercept or alpha in this regression is .0001809 which is not significantly different from zero. The t value is 15.56 which is greater than the t stat for a 5% significance level and the p value is less than .0001 which is the

Related

## Islemarine Boat Company - Capital Structure

665 Words | 3 PagesThe start-up capital required is $5,000,000 lower than Plan B. Even though the variable costs are higher in Plan A, the reduced risk from a lower initial investment makes this option more palatable. Now that the decision to move forward with Plan A

## Dfa Case Essay

383 Words | 2 PagesThe average performance of DFA large company value fund has very small difference with crsp cap decile #1. It is a little lower than S&P 500. It means the portfolio is diversified to eliminate unsystematic risk, but tracking error is also exist.The reason of the tiny difference may be timing or security selection. the tiny difference may be timing or security selection. What conclusions can you draw from all this?

## Capm Essay

461 Words | 2 PagesAs the project is twice as risky as the firm’s normal operations, it beta will be equal to 2 x 0.75 = 1.5: [pic] We will now use this required rate of return to calculate the NPV of the project: [pic] As the project has a positive NPV, it should be accepted. Question Five Consider an investment

## Nike Case Essay

1294 Words | 6 Pages* Cost of Equity: * Beta: she used the average beta of the last 5 years, which is also acceptable. However, we decide to use the Bayesian beta calculated with the firm’s present beta as a measure of the future beta assessing for future risk. * Risk-free rate: from the investor’s perspective, we conclude that a 10-year holding period would be more realistic estimate than 20-year. Therefore, we decide to use 10-year U.S. Treasury yield as our risk-free rate in this case. * Risk premium: using the geometric mean from 1926 to 1999 might be problematic, since the risk premium of recent decades is obviously lower than earlier (stated in the lecture).

## Amazon vs Ebay

611 Words | 3 PagesRatio | Formula | Amaon 2013 | eBay 2013 | Debt Ratio | TL/TA | | | In leverage ratio, I choose debt ratio, eBay is 24.6% while Amazon is 54.8%. In this ratio, eBay is lower than Amazon which means eBay has less debt should to pay than Amazon. EBay’s assets are financed more through equity than debt compare to Amazon, illustrated that eBay has a lower risk in operation. In addition, eBay may have more borrowing capacity and financial flexible to enlarge its business than Amazon. Let’s see some profitability ratio to have some in-depth discussion.

## Acc 291 Week 3 Budgets Essay

4190 Words | 17 PagesTherefore, the recommendation project which have higher rate of return than 25% is project B. 3.3 Net Present Value Project A Year | 11% Col. | Net Cash Inflow | Present Value of Net Cash Inflow | 1 | 0.901 | 7,500 | 6,757.5 | 2 | 0.812 | 7,750 | 6,293 | 3 | 0.731 | 8,000 | 5,848 | 4 | 0.659 | 7,750 | 5,107.25 | 5 | 0.593 | 7,500 | 4,447.5 | Total PV of Net Cash Inflow = $28,453.25 Less Investment =

## Eco321 Week 4 Econometric Methods Chapter 3

636 Words | 3 PagesHowever, in a Probit model the marginal effect is the defined by the coefficient multiplied by the G function. This means we are looking for the statistical significance of this combined partial effect not the statistical significance of the coefficient. This statistical significance is illustrated appendix 2.2 and we observe that resplast, weekslast, propresp and mailsyear are statistically significant at the 5% confidence level. However only the variable avggift was not statistically significant at the 5% confidence level

## Summary of Financial Analysis with Exhibits Krispy Kreme Acquisition

1064 Words | 5 PagesThe advantage of this target capital structure offers the lowest cost of capital resulting from its tax deductibility. Krispy Kreme has the current Capital Structure, according to The Wall Street Journal: Total Debt to Total Equity 0.76 Total Debt to Total Equity 0.75 Total Debt to Total Assets 0.59 Interest Coverage 48.44 Long-Term Debt to Equity 0.63 Long-Term Debt to Total Capital 0.62 Long-Term Debt to Assets 0.00 The debt to equity ratio of .69 Krispy Kreme uses very little debt in its capital structure. Their current ratio is 2.51 and they have a quick ration of 2.14. Some companies that have little or no debt, even

## Hertz Corporation Essay

913 Words | 4 Pages#: 208030-PDF-ENG Analysis: The value of the Hertz Corporation calculated using discounted cash flow method is approximately $ 6.1 billion, whilst the final revised offer is $ 5.6 billion. The final offer of $ 5.6 billion is quite reasonable for the Hertz Corporation as it was considering that it would not be able to receive $ 5.4 billion earlier. The price is little lower than $ 6.1 billion but is quite reasonable. The possible impact of synergies after making several changes had reduced the costs and increased the profitability of the company. This had increased the price or value of the company and thus increased to $ 6.1 billion.

## Overlapping Confidence Intervals and Statistical Significance

459 Words | 2 PagesSuppose we are interested in comparing means from two independent samples. The mean of the first sample is 9 and the mean of the second sample is 17. Let’s assume that the two group means have the same standard errors, equal to 2.5. The 95 percent confidence interval for the first group mean can be calculated as: 9 ± 1.96 × 2.5 where 1.96 is the critical t-value. The confidence interval for the first group mean is thus (4.1, 13.9).

### Islemarine Boat Company - Capital Structure

665 Words | 3 Pages### Dfa Case Essay

383 Words | 2 Pages### Capm Essay

461 Words | 2 Pages### Nike Case Essay

1294 Words | 6 Pages### Amazon vs Ebay

611 Words | 3 Pages### Acc 291 Week 3 Budgets Essay

4190 Words | 17 Pages### Eco321 Week 4 Econometric Methods Chapter 3

636 Words | 3 Pages### Summary of Financial Analysis with Exhibits Krispy Kreme Acquisition

1064 Words | 5 Pages### Hertz Corporation Essay

913 Words | 4 Pages### Overlapping Confidence Intervals and Statistical Significance

459 Words | 2 Pages