Stock Analysis on Net

Motorola Solutions Inc. (NYSE:MSI)

This company has been moved to the archive! The financial data has not been updated since August 1, 2024.

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 Motorola Solutions Inc. common stock.


Rates of Return

Motorola Solutions Inc., monthly rates of return

Microsoft Excel
Motorola Solutions Inc. (MSI) Standard & Poor’s 500 (S&P 500)
t Date PriceMSI,t1 DividendMSI,t1 RMSI,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2019 $116.91 2,704.10
1. Feb 28, 2019 $143.12 22.42% 2,784.49 2.97%
2. Mar 31, 2019 $140.42 $0.57 -1.49% 2,834.40 1.79%
3. Apr 30, 2019 $144.91 3.20% 2,945.83 3.93%
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2023 $322.87 15.95% 4,567.80 8.92%
59. Dec 31, 2023 $313.09 $0.98 -2.73% 4,769.83 4.42%
Average (R): 2.08% 1.11%
Standard deviation: 7.42% 5.31%
Motorola Solutions Inc. (MSI) Standard & Poor’s 500 (S&P 500)
t Date PriceMSI,t1 DividendMSI,t1 RMSI,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2019 $116.91 2,704.10
1. Feb 28, 2019 $143.12 22.42% 2,784.49 2.97%
2. Mar 31, 2019 $140.42 $0.57 -1.49% 2,834.40 1.79%
3. Apr 30, 2019 $144.91 3.20% 2,945.83 3.93%
4. May 31, 2019 $149.95 3.48% 2,752.06 -6.58%
5. Jun 30, 2019 $166.73 $0.57 11.57% 2,941.76 6.89%
6. Jul 31, 2019 $165.96 -0.46% 2,980.38 1.31%
7. Aug 31, 2019 $180.91 9.01% 2,926.46 -1.81%
8. Sep 30, 2019 $170.41 $0.57 -5.49% 2,976.74 1.72%
9. Oct 31, 2019 $166.32 -2.40% 3,037.56 2.04%
10. Nov 30, 2019 $167.30 0.59% 3,140.98 3.40%
11. Dec 31, 2019 $161.14 $0.64 -3.30% 3,230.78 2.86%
12. Jan 31, 2020 $177.00 9.84% 3,225.52 -0.16%
13. Feb 29, 2020 $165.68 -6.40% 2,954.22 -8.41%
14. Mar 31, 2020 $132.92 $0.64 -19.39% 2,584.59 -12.51%
15. Apr 30, 2020 $143.81 8.19% 2,912.43 12.68%
16. May 31, 2020 $135.33 -5.90% 3,044.31 4.53%
17. Jun 30, 2020 $140.13 $0.64 4.02% 3,100.29 1.84%
18. Jul 31, 2020 $139.80 -0.24% 3,271.12 5.51%
19. Aug 31, 2020 $154.75 10.69% 3,500.31 7.01%
20. Sep 30, 2020 $156.81 $0.64 1.74% 3,363.00 -3.92%
21. Oct 31, 2020 $158.06 0.80% 3,269.96 -2.77%
22. Nov 30, 2020 $171.53 8.52% 3,621.63 10.75%
23. Dec 31, 2020 $170.06 $0.71 -0.44% 3,756.07 3.71%
24. Jan 31, 2021 $167.55 -1.48% 3,714.24 -1.11%
25. Feb 28, 2021 $175.48 4.73% 3,811.15 2.61%
26. Mar 31, 2021 $188.05 $0.71 7.57% 3,972.89 4.24%
27. Apr 30, 2021 $188.30 0.13% 4,181.17 5.24%
28. May 31, 2021 $205.31 9.03% 4,204.11 0.55%
29. Jun 30, 2021 $216.85 $0.71 5.97% 4,297.50 2.22%
30. Jul 31, 2021 $223.92 3.26% 4,395.26 2.27%
31. Aug 31, 2021 $244.22 9.07% 4,522.68 2.90%
32. Sep 30, 2021 $232.32 $0.71 -4.58% 4,307.54 -4.76%
33. Oct 31, 2021 $248.59 7.00% 4,605.38 6.91%
34. Nov 30, 2021 $253.18 1.85% 4,567.00 -0.83%
35. Dec 31, 2021 $271.70 $0.79 7.63% 4,766.18 4.36%
36. Jan 31, 2022 $231.94 -14.63% 4,515.55 -5.26%
37. Feb 28, 2022 $220.43 -4.96% 4,373.94 -3.14%
38. Mar 31, 2022 $242.20 $0.79 10.23% 4,530.41 3.58%
39. Apr 30, 2022 $213.69 -11.77% 4,131.93 -8.80%
40. May 31, 2022 $219.74 2.83% 4,132.15 0.01%
41. Jun 30, 2022 $209.60 $0.79 -4.26% 3,785.38 -8.39%
42. Jul 31, 2022 $238.59 13.83% 4,130.29 9.11%
43. Aug 31, 2022 $243.41 2.02% 3,955.00 -4.24%
44. Sep 30, 2022 $223.97 $0.79 -7.66% 3,585.62 -9.34%
45. Oct 31, 2022 $249.71 11.49% 3,871.98 7.99%
46. Nov 30, 2022 $272.20 9.01% 4,080.11 5.38%
47. Dec 31, 2022 $257.71 $0.88 -5.00% 3,839.50 -5.90%
48. Jan 31, 2023 $257.01 -0.27% 4,076.60 6.18%
49. Feb 28, 2023 $262.81 2.26% 3,970.15 -2.61%
50. Mar 31, 2023 $286.13 $0.88 9.21% 4,109.31 3.51%
51. Apr 30, 2023 $291.40 1.84% 4,169.48 1.46%
52. May 31, 2023 $281.92 -3.25% 4,179.83 0.25%
53. Jun 30, 2023 $293.28 $0.88 4.34% 4,376.86 4.71%
54. Jul 31, 2023 $286.63 -2.27% 4,588.96 4.85%
55. Aug 31, 2023 $283.57 -1.07% 4,507.66 -1.77%
56. Sep 30, 2023 $272.24 $0.88 -3.69% 4,288.05 -4.87%
57. Oct 31, 2023 $278.46 2.28% 4,193.80 -2.20%
58. Nov 30, 2023 $322.87 15.95% 4,567.80 8.92%
59. Dec 31, 2023 $313.09 $0.98 -2.73% 4,769.83 4.42%
Average (R): 2.08% 1.11%
Standard deviation: 7.42% 5.31%

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1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of MSI during period t

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


Variance and Covariance

Motorola Solutions Inc., calculation of variance and covariance of returns

Microsoft Excel
t Date RMSI,t RS&P 500,t (RMSI,tRMSI)2 (RS&P 500,tRS&P 500)2 (RMSI,tRMSI)×(RS&P 500,tRS&P 500)
1. Feb 28, 2019 22.42% 2.97% 413.82 3.49 37.98
2. Mar 31, 2019 -1.49% 1.79% 12.71 0.47 -2.45
3. Apr 30, 2019 3.20% 3.93% 1.26 7.98 3.17
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2023 15.95% 8.92% 192.44 61.03 108.37
59. Dec 31, 2023 -2.73% 4.42% 23.06 11.00 -15.93
Total (Σ): 3,191.39 1,634.30 1,502.06
t Date RMSI,t RS&P 500,t (RMSI,tRMSI)2 (RS&P 500,tRS&P 500)2 (RMSI,tRMSI)×(RS&P 500,tRS&P 500)
1. Feb 28, 2019 22.42% 2.97% 413.82 3.49 37.98
2. Mar 31, 2019 -1.49% 1.79% 12.71 0.47 -2.45
3. Apr 30, 2019 3.20% 3.93% 1.26 7.98 3.17
4. May 31, 2019 3.48% -6.58% 1.96 59.04 -10.77
5. Jun 30, 2019 11.57% 6.89% 90.14 33.49 54.94
6. Jul 31, 2019 -0.46% 1.31% 6.44 0.04 -0.53
7. Aug 31, 2019 9.01% -1.81% 48.05 8.50 -20.21
8. Sep 30, 2019 -5.49% 1.72% 57.23 0.37 -4.63
9. Oct 31, 2019 -2.40% 2.04% 20.04 0.88 -4.20
10. Nov 30, 2019 0.59% 3.40% 2.21 5.28 -3.42
11. Dec 31, 2019 -3.30% 2.86% 28.90 3.07 -9.42
12. Jan 31, 2020 9.84% -0.16% 60.31 1.61 -9.85
13. Feb 29, 2020 -6.40% -8.41% 71.77 90.57 80.62
14. Mar 31, 2020 -19.39% -12.51% 460.66 185.44 292.28
15. Apr 30, 2020 8.19% 12.68% 37.41 134.06 70.82
16. May 31, 2020 -5.90% 4.53% 63.57 11.71 -27.29
17. Jun 30, 2020 4.02% 1.84% 3.78 0.54 1.42
18. Jul 31, 2020 -0.24% 5.51% 5.34 19.40 -10.18
19. Aug 31, 2020 10.69% 7.01% 74.26 34.82 50.85
20. Sep 30, 2020 1.74% -3.92% 0.11 25.29 1.67
21. Oct 31, 2020 0.80% -2.77% 1.64 15.00 4.95
22. Nov 30, 2020 8.52% 10.75% 41.55 93.10 62.19
23. Dec 31, 2020 -0.44% 3.71% 6.35 6.79 -6.57
24. Jan 31, 2021 -1.48% -1.11% 12.62 4.93 7.88
25. Feb 28, 2021 4.73% 2.61% 7.06 2.26 3.99
26. Mar 31, 2021 7.57% 4.24% 30.16 9.85 17.23
27. Apr 30, 2021 0.13% 5.24% 3.78 17.11 -8.04
28. May 31, 2021 9.03% 0.55% 48.40 0.31 -3.88
29. Jun 30, 2021 5.97% 2.22% 15.13 1.24 4.34
30. Jul 31, 2021 3.26% 2.27% 1.40 1.37 1.38
31. Aug 31, 2021 9.07% 2.90% 48.85 3.22 12.53
32. Sep 30, 2021 -4.58% -4.76% 44.33 34.37 39.04
33. Oct 31, 2021 7.00% 6.91% 24.28 33.74 28.62
34. Nov 30, 2021 1.85% -0.83% 0.05 3.76 0.45
35. Dec 31, 2021 7.63% 4.36% 30.81 10.60 18.07
36. Jan 31, 2022 -14.63% -5.26% 279.23 40.51 106.35
37. Feb 28, 2022 -4.96% -3.14% 49.54 17.99 29.86
38. Mar 31, 2022 10.23% 3.58% 66.56 6.11 20.16
39. Apr 30, 2022 -11.77% -8.80% 191.75 98.04 137.11
40. May 31, 2022 2.83% 0.01% 0.57 1.21 -0.83
41. Jun 30, 2022 -4.26% -8.39% 40.09 90.21 60.13
42. Jul 31, 2022 13.83% 9.11% 138.18 64.09 94.11
43. Aug 31, 2022 2.02% -4.24% 0.00 28.62 0.30
44. Sep 30, 2022 -7.66% -9.34% 94.83 109.11 101.72
45. Oct 31, 2022 11.49% 7.99% 88.67 47.34 64.79
46. Nov 30, 2022 9.01% 5.38% 48.03 18.23 29.59
47. Dec 31, 2022 -5.00% -5.90% 50.07 49.04 49.56
48. Jan 31, 2023 -0.27% 6.18% 5.51 25.70 -11.90
49. Feb 28, 2023 2.26% -2.61% 0.03 13.82 -0.67
50. Mar 31, 2023 9.21% 3.51% 50.86 5.76 17.11
51. Apr 30, 2023 1.84% 1.46% 0.05 0.13 -0.08
52. May 31, 2023 -3.25% 0.25% 28.40 0.74 4.57
53. Jun 30, 2023 4.34% 4.71% 5.13 13.02 8.17
54. Jul 31, 2023 -2.27% 4.85% 18.87 13.99 -16.25
55. Aug 31, 2023 -1.07% -1.77% 9.88 8.28 9.05
56. Sep 30, 2023 -3.69% -4.87% 33.19 35.73 34.44
57. Oct 31, 2023 2.28% -2.20% 0.04 10.92 -0.69
58. Nov 30, 2023 15.95% 8.92% 192.44 61.03 108.37
59. Dec 31, 2023 -2.73% 4.42% 23.06 11.00 -15.93
Total (Σ): 3,191.39 1,634.30 1,502.06

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VarianceMSI = Σ(RMSI,tRMSI)2 ÷ (59 – 1)
= 3,191.39 ÷ (59 – 1)
= 55.02

VarianceS&P 500 = Σ(RS&P 500,tRS&P 500)2 ÷ (59 – 1)
= 1,634.30 ÷ (59 – 1)
= 28.18

CovarianceMSI, S&P 500 = Σ(RMSI,tRMSI)×(RS&P 500,tRS&P 500) ÷ (59 – 1)
= 1,502.06 ÷ (59 – 1)
= 25.90


Systematic Risk (β) Estimation

Microsoft Excel
VarianceMSI 55.02
VarianceS&P 500 28.18
CovarianceMSI, S&P 500 25.90
Correlation coefficientMSI, S&P 5001 0.66
βMSI2 0.92
αMSI3 1.06%

Calculations

1 Correlation coefficientMSI, S&P 500
= CovarianceMSI, S&P 500 ÷ (Standard deviationMSI × Standard deviationS&P 500)
= 25.90 ÷ (7.42% × 5.31%)
= 0.66

2 βMSI
= CovarianceMSI, S&P 500 ÷ VarianceS&P 500
= 25.90 ÷ 28.18
= 0.92

3 αMSI
= AverageMSI – βMSI × AverageS&P 500
= 2.08%0.92 × 1.11%
= 1.06%


Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.68%
Expected rate of return on market portfolio2 E(RM) 13.78%
Systematic risk (β) of Motorola Solutions Inc. common stock βMSI 0.92
 
Expected rate of return on Motorola Solutions Inc. common stock3 E(RMSI) 13.05%

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(RMSI) = RF + βMSI [E(RM) – RF]
= 4.68% + 0.92 [13.78%4.68%]
= 13.05%