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 Airbnb Inc. common stock.
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- Statement of Comprehensive Income
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2020
- Return on Equity (ROE) since 2020
- Return on Assets (ROA) since 2020
- Price to Book Value (P/BV) since 2020
- Aggregate Accruals
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Rates of Return
Airbnb Inc., monthly rates of return
| Airbnb Inc. (ABNB) | Standard & Poor’s 500 (S&P 500) | |||||
|---|---|---|---|---|---|---|
| t | Date | PriceABNB,t1 | DividendABNB,t1 | RABNB,t2 | PriceS&P 500,t | RS&P 500,t3 |
| Dec 31, 2020 | ||||||
| 1. | Jan 31, 2021 | |||||
| 2. | Feb 28, 2021 | |||||
| 3. | Mar 31, 2021 | |||||
| . | . | . | . | . | . | . |
| . | . | . | . | . | . | . |
| . | . | . | . | . | . | . |
| 35. | Nov 30, 2023 | |||||
| 36. | Dec 31, 2023 | |||||
| Average (R): | ||||||
| Standard deviation: | ||||||
| Airbnb Inc. (ABNB) | Standard & Poor’s 500 (S&P 500) | |||||
|---|---|---|---|---|---|---|
| t | Date | PriceABNB,t1 | DividendABNB,t1 | RABNB,t2 | PriceS&P 500,t | RS&P 500,t3 |
| Dec 31, 2020 | ||||||
| 1. | Jan 31, 2021 | |||||
| 2. | Feb 28, 2021 | |||||
| 3. | Mar 31, 2021 | |||||
| 4. | Apr 30, 2021 | |||||
| 5. | May 31, 2021 | |||||
| 6. | Jun 30, 2021 | |||||
| 7. | Jul 31, 2021 | |||||
| 8. | Aug 31, 2021 | |||||
| 9. | Sep 30, 2021 | |||||
| 10. | Oct 31, 2021 | |||||
| 11. | Nov 30, 2021 | |||||
| 12. | Dec 31, 2021 | |||||
| 13. | Jan 31, 2022 | |||||
| 14. | Feb 28, 2022 | |||||
| 15. | Mar 31, 2022 | |||||
| 16. | Apr 30, 2022 | |||||
| 17. | May 31, 2022 | |||||
| 18. | Jun 30, 2022 | |||||
| 19. | Jul 31, 2022 | |||||
| 20. | Aug 31, 2022 | |||||
| 21. | Sep 30, 2022 | |||||
| 22. | Oct 31, 2022 | |||||
| 23. | Nov 30, 2022 | |||||
| 24. | Dec 31, 2022 | |||||
| 25. | Jan 31, 2023 | |||||
| 26. | Feb 28, 2023 | |||||
| 27. | Mar 31, 2023 | |||||
| 28. | Apr 30, 2023 | |||||
| 29. | May 31, 2023 | |||||
| 30. | Jun 30, 2023 | |||||
| 31. | Jul 31, 2023 | |||||
| 32. | Aug 31, 2023 | |||||
| 33. | Sep 30, 2023 | |||||
| 34. | Oct 31, 2023 | |||||
| 35. | Nov 30, 2023 | |||||
| 36. | Dec 31, 2023 | |||||
| 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 ABNB during period t
3 Rate of return on S&P 500 (the market portfolio proxy) during period t
Variance and Covariance
Airbnb Inc., calculation of variance and covariance of returns
| t | Date | RABNB,t | RS&P 500,t | (RABNB,t–RABNB)2 | (RS&P 500,t–RS&P 500)2 | (RABNB,t–RABNB)×(RS&P 500,t–RS&P 500) |
|---|---|---|---|---|---|---|
| 1. | Jan 31, 2021 | |||||
| 2. | Feb 28, 2021 | |||||
| 3. | Mar 31, 2021 | |||||
| . | . | . | . | . | . | . |
| . | . | . | . | . | . | . |
| . | . | . | . | . | . | . |
| 35. | Nov 30, 2023 | |||||
| 36. | Dec 31, 2023 | |||||
| Total (Σ): | ||||||
| t | Date | RABNB,t | RS&P 500,t | (RABNB,t–RABNB)2 | (RS&P 500,t–RS&P 500)2 | (RABNB,t–RABNB)×(RS&P 500,t–RS&P 500) |
|---|---|---|---|---|---|---|
| 1. | Jan 31, 2021 | |||||
| 2. | Feb 28, 2021 | |||||
| 3. | Mar 31, 2021 | |||||
| 4. | Apr 30, 2021 | |||||
| 5. | May 31, 2021 | |||||
| 6. | Jun 30, 2021 | |||||
| 7. | Jul 31, 2021 | |||||
| 8. | Aug 31, 2021 | |||||
| 9. | Sep 30, 2021 | |||||
| 10. | Oct 31, 2021 | |||||
| 11. | Nov 30, 2021 | |||||
| 12. | Dec 31, 2021 | |||||
| 13. | Jan 31, 2022 | |||||
| 14. | Feb 28, 2022 | |||||
| 15. | Mar 31, 2022 | |||||
| 16. | Apr 30, 2022 | |||||
| 17. | May 31, 2022 | |||||
| 18. | Jun 30, 2022 | |||||
| 19. | Jul 31, 2022 | |||||
| 20. | Aug 31, 2022 | |||||
| 21. | Sep 30, 2022 | |||||
| 22. | Oct 31, 2022 | |||||
| 23. | Nov 30, 2022 | |||||
| 24. | Dec 31, 2022 | |||||
| 25. | Jan 31, 2023 | |||||
| 26. | Feb 28, 2023 | |||||
| 27. | Mar 31, 2023 | |||||
| 28. | Apr 30, 2023 | |||||
| 29. | May 31, 2023 | |||||
| 30. | Jun 30, 2023 | |||||
| 31. | Jul 31, 2023 | |||||
| 32. | Aug 31, 2023 | |||||
| 33. | Sep 30, 2023 | |||||
| 34. | Oct 31, 2023 | |||||
| 35. | Nov 30, 2023 | |||||
| 36. | Dec 31, 2023 | |||||
| Total (Σ): | ||||||
Show all
VarianceABNB = Σ(RABNB,t–RABNB)2 ÷ (36 – 1)
= ÷ (36 – 1)
=
VarianceS&P 500 = Σ(RS&P 500,t–RS&P 500)2 ÷ (36 – 1)
= ÷ (36 – 1)
=
CovarianceABNB, S&P 500 = Σ(RABNB,t–RABNB)×(RS&P 500,t–RS&P 500) ÷ (36 – 1)
= ÷ (36 – 1)
=
Systematic Risk (β) Estimation
| VarianceABNB | |
| VarianceS&P 500 | |
| CovarianceABNB, S&P 500 | |
| Correlation coefficientABNB, S&P 5001 | |
| βABNB2 | |
| αABNB3 |
Calculations
1 Correlation coefficientABNB, S&P 500
= CovarianceABNB, S&P 500 ÷ (Standard deviationABNB × Standard deviationS&P 500)
= ÷ ( × )
=
2 βABNB
= CovarianceABNB, S&P 500 ÷ VarianceS&P 500
= ÷
=
3 αABNB
= AverageABNB – βABNB × AverageS&P 500
= – ×
=
Expected Rate of Return
| Assumptions | ||
| Rate of return on LT Treasury Composite1 | RF | |
| Expected rate of return on market portfolio2 | E(RM) | |
| Systematic risk (β) of Airbnb Inc. common stock | βABNB | |
| Expected rate of return on Airbnb Inc. common stock3 | E(RABNB) | |
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).
3 E(RABNB) = RF + βABNB [E(RM) – RF]
= + [ – ]
=