Stock Analysis on Net
Stock Analysis on Net

HP Inc. (NYSE:HPQ)

This company has been moved to the archive! The financial data has not been updated since August 29, 2019.

Capital Asset Pricing Model (CAPM)

Microsoft Excel

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

Rates of Return

HP Inc., monthly rates of return

Microsoft Excel
HP Inc. (HPQ) Standard & Poor’s 500 (S&P 500)
t Date PriceHPQ,t1 DividendHPQ,t1 RHPQ,t2 PriceS&P 500,t RS&P 500,t3
Nov 30, 2012 $12.99 1,416.18
1. Dec 31, 2012 $14.25 $0.132 10.72% 1,426.19 0.71%
2. Jan 31, 2013 $16.51 15.86% 1,498.11 5.04%
3. Feb 28, 2013 $20.14 21.99% 1,514.68 1.11%
. . . . . . .
. . . . . . .
. . . . . . .
70. Sep 30, 2018 $25.77 $0.139 5.11% 2,913.98 0.43%
71. Oct 31, 2018 $24.14 -6.33% 2,711.74 -6.94%
Average (R): 1.77% 0.96%
Standard deviation: 10.53% 2.87%
HP Inc. (HPQ) Standard & Poor’s 500 (S&P 500)
t Date PriceHPQ,t1 DividendHPQ,t1 RHPQ,t2 PriceS&P 500,t RS&P 500,t3
Nov 30, 2012 $12.99 1,416.18
1. Dec 31, 2012 $14.25 $0.132 10.72% 1,426.19 0.71%
2. Jan 31, 2013 $16.51 15.86% 1,498.11 5.04%
3. Feb 28, 2013 $20.14 21.99% 1,514.68 1.11%
4. Mar 31, 2013 $23.84 $0.132 19.03% 1,569.19 3.60%
5. Apr 30, 2013 $20.60 -13.59% 1,597.57 1.81%
6. May 31, 2013 $24.42 18.54% 1,630.74 2.08%
7. Jun 30, 2013 $24.80 $0.1452 2.15% 1,606.28 -1.50%
8. Jul 31, 2013 $25.68 3.55% 1,685.73 4.95%
9. Aug 31, 2013 $22.34 -13.01% 1,632.97 -3.13%
10. Sep 30, 2013 $20.99 $0.1452 -5.39% 1,681.55 2.97%
11. Oct 31, 2013 $24.37 16.10% 1,756.54 4.46%
12. Nov 30, 2013 $27.35 12.23% 1,805.81 2.80%
13. Dec 31, 2013 $27.98 $0.1452 2.83% 1,848.36 2.36%
14. Jan 31, 2014 $29.00 3.65% 1,782.59 -3.56%
15. Feb 28, 2014 $29.88 3.03% 1,859.45 4.31%
16. Mar 31, 2014 $32.36 $0.1452 8.79% 1,872.34 0.69%
17. Apr 30, 2014 $33.06 2.16% 1,883.95 0.62%
18. May 31, 2014 $33.50 1.33% 1,923.57 2.10%
19. Jun 30, 2014 $33.68 $0.16 1.01% 1,960.23 1.91%
20. Jul 31, 2014 $35.61 5.73% 1,930.67 -1.51%
21. Aug 31, 2014 $38.00 6.71% 2,003.37 3.77%
22. Sep 30, 2014 $35.47 $0.16 -6.24% 1,972.29 -1.55%
23. Oct 31, 2014 $35.88 1.16% 2,018.05 2.32%
24. Nov 30, 2014 $39.06 8.86% 2,067.56 2.45%
25. Dec 31, 2014 $40.13 $0.16 3.15% 2,058.90 -0.42%
26. Jan 31, 2015 $36.13 -9.97% 1,994.99 -3.10%
27. Feb 28, 2015 $34.84 -3.57% 2,104.50 5.49%
28. Mar 31, 2015 $31.16 $0.16 -10.10% 2,067.89 -1.74%
29. Apr 30, 2015 $32.97 5.81% 2,085.51 0.85%
30. May 31, 2015 $33.40 1.30% 2,107.39 1.05%
31. Jun 30, 2015 $30.01 $0.176 -9.62% 2,063.11 -2.10%
32. Jul 31, 2015 $30.52 1.70% 2,103.84 1.97%
33. Aug 31, 2015 $28.06 -8.06% 1,972.18 -6.26%
34. Sep 30, 2015 $25.61 $0.176 -8.10% 1,920.03 -2.64%
35. Oct 31, 2015 $26.96 5.27% 2,079.36 8.30%
36. Nov 30, 2015 $12.54 -53.49% 2,080.41 0.05%
37. Dec 31, 2015 $11.84 $0.124 -4.59% 2,043.94 -1.75%
38. Jan 31, 2016 $9.71 -17.99% 1,940.24 -5.07%
39. Feb 29, 2016 $10.69 10.09% 1,932.23 -0.41%
40. Mar 31, 2016 $12.32 $0.124 16.41% 2,059.74 6.60%
41. Apr 30, 2016 $12.27 -0.41% 2,065.30 0.27%
42. May 31, 2016 $13.38 9.05% 2,096.95 1.53%
43. Jun 30, 2016 $12.55 $0.124 -5.28% 2,098.86 0.09%
44. Jul 31, 2016 $14.01 11.63% 2,173.60 3.56%
45. Aug 31, 2016 $14.37 2.57% 2,170.95 -0.12%
46. Sep 30, 2016 $15.53 $0.124 8.94% 2,168.27 -0.12%
47. Oct 31, 2016 $14.49 -6.70% 2,126.15 -1.94%
48. Nov 30, 2016 $15.40 6.28% 2,198.81 3.42%
49. Dec 31, 2016 $14.84 $0.133 -2.77% 2,238.83 1.82%
50. Jan 31, 2017 $15.05 1.42% 2,278.87 1.79%
51. Feb 28, 2017 $17.37 15.42% 2,363.64 3.72%
52. Mar 31, 2017 $17.88 $0.133 3.70% 2,362.72 -0.04%
53. Apr 30, 2017 $18.82 5.26% 2,384.20 0.91%
54. May 31, 2017 $18.76 -0.32% 2,411.80 1.16%
55. Jun 30, 2017 $17.48 $0.133 -6.11% 2,423.41 0.48%
56. Jul 31, 2017 $19.10 9.27% 2,470.30 1.93%
57. Aug 31, 2017 $19.08 -0.10% 2,471.65 0.05%
58. Sep 30, 2017 $19.96 $0.133 5.31% 2,519.36 1.93%
59. Oct 31, 2017 $21.55 7.97% 2,575.26 2.22%
60. Nov 30, 2017 $21.45 -0.46% 2,647.58 2.81%
61. Dec 31, 2017 $21.01 $0.139 -1.40% 2,673.61 0.98%
62. Jan 31, 2018 $23.32 10.99% 2,823.81 5.62%
63. Feb 28, 2018 $23.39 0.30% 2,713.83 -3.89%
64. Mar 31, 2018 $21.92 $0.139 -5.69% 2,640.87 -2.69%
65. Apr 30, 2018 $21.49 -1.96% 2,648.05 0.27%
66. May 31, 2018 $22.03 2.51% 2,705.27 2.16%
67. Jun 30, 2018 $22.69 $0.139 3.63% 2,718.37 0.48%
68. Jul 31, 2018 $23.08 1.72% 2,816.29 3.60%
69. Aug 31, 2018 $24.65 6.80% 2,901.52 3.03%
70. Sep 30, 2018 $25.77 $0.139 5.11% 2,913.98 0.43%
71. Oct 31, 2018 $24.14 -6.33% 2,711.74 -6.94%
Average (R): 1.77% 0.96%
Standard deviation: 10.53% 2.87%

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 HPQ during period t

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

Variance and Covariance

HP Inc., calculation of variance and covariance of returns

Microsoft Excel
t Date RHPQ,t RS&P 500,t (RHPQ,t–RHPQ)2 (RS&P 500,t–RS&P 500)2 (RHPQ,t–RHPQ)×(RS&P 500,t–RS&P 500)
1. Dec 31, 2012 10.72% 0.71% 80.01 0.06 -2.26
2. Jan 31, 2013 15.86% 5.04% 198.48 16.67 57.52
3. Feb 28, 2013 21.99% 1.11% 408.66 0.02 2.96
. . . . . . .
. . . . . . .
. . . . . . .
70. Sep 30, 2018 5.11% 0.43% 11.13 0.28 -1.77
71. Oct 31, 2018 -6.33% -6.94% 65.55 62.41 63.96
Total (Σ): 7,757.62 576.08 1,004.69
t Date RHPQ,t RS&P 500,t (RHPQ,t–RHPQ)2 (RS&P 500,t–RS&P 500)2 (RHPQ,t–RHPQ)×(RS&P 500,t–RS&P 500)
1. Dec 31, 2012 10.72% 0.71% 80.01 0.06 -2.26
2. Jan 31, 2013 15.86% 5.04% 198.48 16.67 57.52
3. Feb 28, 2013 21.99% 1.11% 408.66 0.02 2.96
4. Mar 31, 2013 19.03% 3.60% 297.75 6.97 45.54
5. Apr 30, 2013 -13.59% 1.81% 235.99 0.72 -13.04
6. May 31, 2013 18.54% 2.08% 281.31 1.25 18.73
7. Jun 30, 2013 2.15% -1.50% 0.14 6.05 -0.93
8. Jul 31, 2013 3.55% 4.95% 3.16 15.89 7.08
9. Aug 31, 2013 -13.01% -3.13% 218.38 16.72 60.43
10. Sep 30, 2013 -5.39% 2.97% 51.33 4.06 -14.44
11. Oct 31, 2013 16.10% 4.46% 205.39 12.25 50.16
12. Nov 30, 2013 12.23% 2.80% 109.34 3.41 19.30
13. Dec 31, 2013 2.83% 2.36% 1.13 1.95 1.48
14. Jan 31, 2014 3.65% -3.56% 3.51 20.41 -8.47
15. Feb 28, 2014 3.03% 4.31% 1.60 11.24 4.23
16. Mar 31, 2014 8.79% 0.69% 49.20 0.07 -1.87
17. Apr 30, 2014 2.16% 0.62% 0.15 0.12 -0.13
18. May 31, 2014 1.33% 2.10% 0.19 1.31 -0.50
19. Jun 30, 2014 1.01% 1.91% 0.57 0.90 -0.72
20. Jul 31, 2014 5.73% -1.51% 15.67 6.09 -9.77
21. Aug 31, 2014 6.71% 3.77% 24.41 7.87 13.86
22. Sep 30, 2014 -6.24% -1.55% 64.13 6.31 20.11
23. Oct 31, 2014 1.16% 2.32% 0.38 1.85 -0.84
24. Nov 30, 2014 8.86% 2.45% 50.29 2.23 10.59
25. Dec 31, 2014 3.15% -0.42% 1.90 1.90 -1.90
26. Jan 31, 2015 -9.97% -3.10% 137.80 16.51 47.70
27. Feb 28, 2015 -3.57% 5.49% 28.54 20.52 -24.20
28. Mar 31, 2015 -10.10% -1.74% 141.01 7.29 32.05
29. Apr 30, 2015 5.81% 0.85% 16.30 0.01 -0.43
30. May 31, 2015 1.30% 1.05% 0.22 0.01 -0.04
31. Jun 30, 2015 -9.62% -2.10% 129.83 9.37 34.88
32. Jul 31, 2015 1.70% 1.97% 0.01 1.03 -0.07
33. Aug 31, 2015 -8.06% -6.26% 96.66 52.10 70.96
34. Sep 30, 2015 -8.10% -2.64% 97.52 12.99 35.59
35. Oct 31, 2015 5.27% 8.30% 12.25 53.86 25.69
36. Nov 30, 2015 -53.49% 0.05% 3,053.45 0.83 50.24
37. Dec 31, 2015 -4.59% -1.75% 40.51 7.36 17.27
38. Jan 31, 2016 -17.99% -5.07% 390.51 36.40 119.22
39. Feb 29, 2016 10.09% -0.41% 69.24 1.88 -11.42
40. Mar 31, 2016 16.41% 6.60% 214.23 31.80 82.54
41. Apr 30, 2016 -0.41% 0.27% 4.74 0.48 1.50
42. May 31, 2016 9.05% 1.53% 52.93 0.33 4.17
43. Jun 30, 2016 -5.28% 0.09% 49.67 0.75 6.12
44. Jul 31, 2016 11.63% 3.56% 97.26 6.77 25.65
45. Aug 31, 2016 2.57% -0.12% 0.64 1.17 -0.86
46. Sep 30, 2016 8.94% -0.12% 51.32 1.17 -7.76
47. Oct 31, 2016 -6.70% -1.94% 71.71 8.42 24.58
48. Nov 30, 2016 6.28% 3.42% 20.33 6.04 11.08
49. Dec 31, 2016 -2.77% 1.82% 20.65 0.74 -3.91
50. Jan 31, 2017 1.42% 1.79% 0.13 0.69 -0.30
51. Feb 28, 2017 15.42% 3.72% 186.16 7.62 37.66
52. Mar 31, 2017 3.70% -0.04% 3.73 1.00 -1.93
53. Apr 30, 2017 5.26% 0.91% 12.15 0.00 -0.18
54. May 31, 2017 -0.32% 1.16% 4.37 0.04 -0.41
55. Jun 30, 2017 -6.11% 0.48% 62.18 0.23 3.77
56. Jul 31, 2017 9.27% 1.93% 56.20 0.95 7.31
57. Aug 31, 2017 -0.10% 0.05% 3.52 0.82 1.70
58. Sep 30, 2017 5.31% 1.93% 12.52 0.94 3.43
59. Oct 31, 2017 7.97% 2.22% 38.37 1.59 7.80
60. Nov 30, 2017 -0.46% 2.81% 5.00 3.42 -4.13
61. Dec 31, 2017 -1.40% 0.98% 10.08 0.00 -0.07
62. Jan 31, 2018 10.99% 5.62% 85.07 21.70 42.96
63. Feb 28, 2018 0.30% -3.89% 2.16 23.57 7.14
64. Mar 31, 2018 -5.69% -2.69% 55.68 13.31 27.22
65. Apr 30, 2018 -1.96% 0.27% 13.94 0.47 2.57
66. May 31, 2018 2.51% 2.16% 0.55 1.44 0.89
67. Jun 30, 2018 3.63% 0.48% 3.44 0.23 -0.88
68. Jul 31, 2018 1.72% 3.60% 0.00 6.98 -0.14
69. Aug 31, 2018 6.80% 3.03% 25.31 4.27 10.40
70. Sep 30, 2018 5.11% 0.43% 11.13 0.28 -1.77
71. Oct 31, 2018 -6.33% -6.94% 65.55 62.41 63.96
Total (Σ): 7,757.62 576.08 1,004.69

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VarianceHPQ = Σ(RHPQ,t–RHPQ)2 ÷ (71 – 1)
= 7,757.62 ÷ (71 – 1)
= 110.82

VarianceS&P 500 = Σ(RS&P 500,t–RS&P 500)2 ÷ (71 – 1)
= 576.08 ÷ (71 – 1)
= 8.23

CovarianceHPQ, S&P 500 = Σ(RHPQ,t–RHPQ)×(RS&P 500,t–RS&P 500) ÷ (71 – 1)
= 1,004.69 ÷ (71 – 1)
= 14.35

Systematic Risk (β) Estimation

Microsoft Excel
VarianceHPQ 110.82
VarianceS&P 500 8.23
CovarianceHPQ, S&P 500 14.35
Correlation coefficientHPQ, S&P 5001 0.48
βHPQ2 1.74
αHPQ3 0.10%

Calculations

1 Correlation coefficientHPQ, S&P 500
= CovarianceHPQ, S&P 500 ÷ (Standard deviationHPQ × Standard deviationS&P 500)
= 14.35 ÷ (10.53% × 2.87%)
= 0.48

2 βHPQ
= CovarianceHPQ, S&P 500 ÷ VarianceS&P 500
= 14.35 ÷ 8.23
= 1.74

3 αHPQ
= AverageHPQ – βHPQ × AverageS&P 500
= 1.77% – 1.74 × 0.96%
= 0.10%

Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.60%
Expected rate of return on market portfolio2 E(RM) 13.77%
Systematic risk (β) of HP Inc. common stock βHPQ 1.74
 
Expected rate of return on HP Inc. common stock3 E(RHPQ) 20.59%

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(RHPQ) = RF + βHPQ [E(RM) – RF]
= 4.60% + 1.74 [13.77% – 4.60%]
= 20.59%