EBay Inc. is one of the major auction service and one of the world¡¦s largest online trading community. It provides these services by developing the eBay marketplace, which is an internet based community where buyers and sellers are brought together to buy and sell various products. It enables trade on local, national and international basis. Since the company was founded, it has made many acquisitions; the latest one is buying Skype (a VoIP company).
I used EBay Inc. stock to create a single stock portfolio. The stock price increased from $38.94 to $44.43 (approximately 14%) in the past 14 weeks (12th Sept 2005- 12th Dec 2005)
SINGLE STOCK PORTFOLIO:
I used SML to measure the portfolio¡¦s risk adjusted return.
kp = krf + ?Òp (km ¡V krf) + ?Ñ
kp is 14.10%, which is the portfolio return calculated using the geometric average return for the past 14weeks as shown in the excel worksheet.
?Òp is the beta of my single stock portfolio. EBay Inc has a beta of 2.111 which means that theoretically the stock is about 110% more volatile than the market.
km for the eq ...