Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like General Mills Inc. common stock.
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General Mills Inc. pages available for free this week:
- Income Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Analysis of Geographic Areas
- Dividend Discount Model (DDM)
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
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Rates of Return
General Mills Inc. (GIS) | Standard & Poor’s 500 (S&P 500) | |||||
---|---|---|---|---|---|---|
t | Date | PriceGIS,t1 | DividendGIS,t1 | RGIS,t2 | PriceS&P 500,t | RS&P 500,t3 |
Jun 30, 2013 | ||||||
1. | Jul 31, 2013 | |||||
2. | Aug 31, 2013 | |||||
3. | Sep 30, 2013 | |||||
. | . | . | . | . | . | . |
. | . | . | . | . | . | . |
. | . | . | . | . | . | . |
70. | Apr 30, 2019 | |||||
71. | May 31, 2019 | |||||
Average (R): | ||||||
Standard deviation: |
General Mills Inc. (GIS) | Standard & Poor’s 500 (S&P 500) | |||||
---|---|---|---|---|---|---|
t | Date | PriceGIS,t1 | DividendGIS,t1 | RGIS,t2 | PriceS&P 500,t | RS&P 500,t3 |
Jun 30, 2013 | ||||||
1. | Jul 31, 2013 | |||||
2. | Aug 31, 2013 | |||||
3. | Sep 30, 2013 | |||||
4. | Oct 31, 2013 | |||||
5. | Nov 30, 2013 | |||||
6. | Dec 31, 2013 | |||||
7. | Jan 31, 2014 | |||||
8. | Feb 28, 2014 | |||||
9. | Mar 31, 2014 | |||||
10. | Apr 30, 2014 | |||||
11. | May 31, 2014 | |||||
12. | Jun 30, 2014 | |||||
13. | Jul 31, 2014 | |||||
14. | Aug 31, 2014 | |||||
15. | Sep 30, 2014 | |||||
16. | Oct 31, 2014 | |||||
17. | Nov 30, 2014 | |||||
18. | Dec 31, 2014 | |||||
19. | Jan 31, 2015 | |||||
20. | Feb 28, 2015 | |||||
21. | Mar 31, 2015 | |||||
22. | Apr 30, 2015 | |||||
23. | May 31, 2015 | |||||
24. | Jun 30, 2015 | |||||
25. | Jul 31, 2015 | |||||
26. | Aug 31, 2015 | |||||
27. | Sep 30, 2015 | |||||
28. | Oct 31, 2015 | |||||
29. | Nov 30, 2015 | |||||
30. | Dec 31, 2015 | |||||
31. | Jan 31, 2016 | |||||
32. | Feb 29, 2016 | |||||
33. | Mar 31, 2016 | |||||
34. | Apr 30, 2016 | |||||
35. | May 31, 2016 | |||||
36. | Jun 30, 2016 | |||||
37. | Jul 31, 2016 | |||||
38. | Aug 31, 2016 | |||||
39. | Sep 30, 2016 | |||||
40. | Oct 31, 2016 | |||||
41. | Nov 30, 2016 | |||||
42. | Dec 31, 2016 | |||||
43. | Jan 31, 2017 | |||||
44. | Feb 28, 2017 | |||||
45. | Mar 31, 2017 | |||||
46. | Apr 30, 2017 | |||||
47. | May 31, 2017 | |||||
48. | Jun 30, 2017 | |||||
49. | Jul 31, 2017 | |||||
50. | Aug 31, 2017 | |||||
51. | Sep 30, 2017 | |||||
52. | Oct 31, 2017 | |||||
53. | Nov 30, 2017 | |||||
54. | Dec 31, 2017 | |||||
55. | Jan 31, 2018 | |||||
56. | Feb 28, 2018 | |||||
57. | Mar 31, 2018 | |||||
58. | Apr 30, 2018 | |||||
59. | May 31, 2018 | |||||
60. | Jun 30, 2018 | |||||
61. | Jul 31, 2018 | |||||
62. | Aug 31, 2018 | |||||
63. | Sep 30, 2018 | |||||
64. | Oct 31, 2018 | |||||
65. | Nov 30, 2018 | |||||
66. | Dec 31, 2018 | |||||
67. | Jan 31, 2019 | |||||
68. | Feb 28, 2019 | |||||
69. | Mar 31, 2019 | |||||
70. | Apr 30, 2019 | |||||
71. | May 31, 2019 | |||||
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 GIS during period t
3 Rate of return on S&P 500 (the market portfolio proxy) during period t
Variance and Covariance
t | Date | RGIS,t | RS&P 500,t | (RGIS,t–RGIS)2 | (RS&P 500,t–RS&P 500)2 | (RGIS,t–RGIS)×(RS&P 500,t–RS&P 500) |
---|---|---|---|---|---|---|
1. | Jul 31, 2013 | |||||
2. | Aug 31, 2013 | |||||
3. | Sep 30, 2013 | |||||
. | . | . | . | . | . | . |
. | . | . | . | . | . | . |
. | . | . | . | . | . | . |
70. | Apr 30, 2019 | |||||
71. | May 31, 2019 | |||||
Total (Σ): |
t | Date | RGIS,t | RS&P 500,t | (RGIS,t–RGIS)2 | (RS&P 500,t–RS&P 500)2 | (RGIS,t–RGIS)×(RS&P 500,t–RS&P 500) |
---|---|---|---|---|---|---|
1. | Jul 31, 2013 | |||||
2. | Aug 31, 2013 | |||||
3. | Sep 30, 2013 | |||||
4. | Oct 31, 2013 | |||||
5. | Nov 30, 2013 | |||||
6. | Dec 31, 2013 | |||||
7. | Jan 31, 2014 | |||||
8. | Feb 28, 2014 | |||||
9. | Mar 31, 2014 | |||||
10. | Apr 30, 2014 | |||||
11. | May 31, 2014 | |||||
12. | Jun 30, 2014 | |||||
13. | Jul 31, 2014 | |||||
14. | Aug 31, 2014 | |||||
15. | Sep 30, 2014 | |||||
16. | Oct 31, 2014 | |||||
17. | Nov 30, 2014 | |||||
18. | Dec 31, 2014 | |||||
19. | Jan 31, 2015 | |||||
20. | Feb 28, 2015 | |||||
21. | Mar 31, 2015 | |||||
22. | Apr 30, 2015 | |||||
23. | May 31, 2015 | |||||
24. | Jun 30, 2015 | |||||
25. | Jul 31, 2015 | |||||
26. | Aug 31, 2015 | |||||
27. | Sep 30, 2015 | |||||
28. | Oct 31, 2015 | |||||
29. | Nov 30, 2015 | |||||
30. | Dec 31, 2015 | |||||
31. | Jan 31, 2016 | |||||
32. | Feb 29, 2016 | |||||
33. | Mar 31, 2016 | |||||
34. | Apr 30, 2016 | |||||
35. | May 31, 2016 | |||||
36. | Jun 30, 2016 | |||||
37. | Jul 31, 2016 | |||||
38. | Aug 31, 2016 | |||||
39. | Sep 30, 2016 | |||||
40. | Oct 31, 2016 | |||||
41. | Nov 30, 2016 | |||||
42. | Dec 31, 2016 | |||||
43. | Jan 31, 2017 | |||||
44. | Feb 28, 2017 | |||||
45. | Mar 31, 2017 | |||||
46. | Apr 30, 2017 | |||||
47. | May 31, 2017 | |||||
48. | Jun 30, 2017 | |||||
49. | Jul 31, 2017 | |||||
50. | Aug 31, 2017 | |||||
51. | Sep 30, 2017 | |||||
52. | Oct 31, 2017 | |||||
53. | Nov 30, 2017 | |||||
54. | Dec 31, 2017 | |||||
55. | Jan 31, 2018 | |||||
56. | Feb 28, 2018 | |||||
57. | Mar 31, 2018 | |||||
58. | Apr 30, 2018 | |||||
59. | May 31, 2018 | |||||
60. | Jun 30, 2018 | |||||
61. | Jul 31, 2018 | |||||
62. | Aug 31, 2018 | |||||
63. | Sep 30, 2018 | |||||
64. | Oct 31, 2018 | |||||
65. | Nov 30, 2018 | |||||
66. | Dec 31, 2018 | |||||
67. | Jan 31, 2019 | |||||
68. | Feb 28, 2019 | |||||
69. | Mar 31, 2019 | |||||
70. | Apr 30, 2019 | |||||
71. | May 31, 2019 | |||||
Total (Σ): |
Show all
VarianceGIS = Σ(RGIS,t–RGIS)2 ÷ (71 – 1)
= ÷ (71 – 1)
=
VarianceS&P 500 = Σ(RS&P 500,t–RS&P 500)2 ÷ (71 – 1)
= ÷ (71 – 1)
=
CovarianceGIS, S&P 500 = Σ(RGIS,t–RGIS)×(RS&P 500,t–RS&P 500) ÷ (71 – 1)
= ÷ (71 – 1)
=
Systematic Risk (β) Estimation
VarianceGIS | |
VarianceS&P 500 | |
CovarianceGIS, S&P 500 | |
Correlation coefficientGIS, S&P 5001 | |
βGIS2 | |
αGIS3 |
Calculations
1 Correlation coefficientGIS, S&P 500
= CovarianceGIS, S&P 500 ÷ (Standard deviationGIS × Standard deviationS&P 500)
= ÷ ( × )
=
2 βGIS
= CovarianceGIS, S&P 500 ÷ VarianceS&P 500
= ÷
=
3 αGIS
= AverageGIS – βGIS × 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 General Mills Inc. common stock | βGIS | |
Expected rate of return on General Mills Inc. common stock3 | E(RGIS) |
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(RGIS) = RF + βGIS [E(RM) – RF]
= + [ – ]
=