Computation of Security Market Line (SML) of stocks and its analysis.
|
Name
|
Symbol
|
Exp Price date (p1)
|
Price today\'s date close (p0)
|
Gain/loss
|
Expected Dividend -same as previous year
|
Return Percentage
|
Stock Beta from Yahoo
|
Desired Portfolio Percent
|
|
Ebay Inc.
|
EBAY
|
$ 22.27
|
$ 23.60
|
$ (1.33)
|
$0.00
|
-5.64%
|
1.75
|
15%
|
|
Sun Trust Bank
|
STI
|
$ 19.18
|
$ 22.55
|
$ (3.37)
|
$0.75
|
-11.62%
|
1.27
|
30%
|
|
Safeway Inc.
|
SWY
|
$ 20.71
|
$ 19.72
|
$ 0.99
|
$0.37
|
6.90%
|
0.66
|
35%
|
|
Starbucks Corp.
|
SBUX
|
$ 17.64
|
$ 20.65
|
$ (3.01)
|
$0.00
|
-14.58%
|
1.32
|
20%
|
|
|
|
$ 79.80
|
$ 86.52
|
|
|
|
|
100%
|
Using each of the four stocks selected for your portfolio last week
- Calculate the Security Market Line (SML) equation for each stock.
- Assume a U.S. Treasury rate of 3% as the risk free rate in your SML. Use the beta for your stock as presented in
- What does the SML tell you about your portfolio of stocks? How can the SML assist in predicting the expected return on your stocks?