Question

In: Accounting

Things to research and report on should include, but are not limited to

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Expert Solution

Stock Valuation

  Tesla Returns  
Date Adj Close Stock Returns(%)
01/05/2016 44.646  
01/06/2016 42.456001 -4.91%
01/07/2016 46.958 10.60%
01/08/2016 42.402 -9.70%
01/09/2016 40.806 -3.76%
01/10/2016 39.546001 -3.09%
01/11/2016 37.880001 -4.21%
01/12/2016 42.737999 12.82%
01/01/2017 50.386002 17.90%
01/02/2017 49.998001 -0.77%
01/03/2017 55.66 11.32%
01/04/2017 62.813999 12.85%
01/05/2017 68.202003 8.58%
01/06/2017 72.321999 6.04%
01/07/2017 64.694 -10.55%
01/08/2017 71.18 10.03%
01/09/2017 68.220001 -4.16%
01/10/2017 66.306 -2.81%
01/11/2017 61.77 -6.84%
01/12/2017 62.27 0.81%
01/01/2018 70.862 13.80%
01/02/2018 68.612 -3.18%
01/03/2018 53.226002 -22.42%
01/04/2018 58.779999 10.43%
01/05/2018 56.945999 -3.12%
01/06/2018 68.589996 20.45%
01/07/2018 59.627998 -13.07%
01/08/2018 60.332001 1.18%
01/09/2018 52.953999 -12.23%
01/10/2018 67.463997 27.40%
01/11/2018 70.096001 3.90%
01/12/2018 66.559998 -5.04%
01/01/2019 61.403999 -7.75%
01/02/2019 63.976002 4.19%
01/03/2019 55.972 -12.51%
01/04/2019 47.737999 -14.71%
01/05/2019 37.032001 -22.43%
01/06/2019 44.692001 20.68%
01/07/2019 48.321999 8.12%
01/08/2019 45.122002 -6.62%
01/09/2019 48.174 6.76%
01/10/2019 62.984001 30.74%
01/11/2019 65.987999 4.77%
01/12/2019 83.666 26.79%
01/01/2020 130.113998 55.52%
01/02/2020 133.598007 2.68%
01/03/2020 104.800003 -21.56%
01/04/2020 156.376007 49.21%
01/05/2020 167 6.79%
01/06/2020 215.962006 29.32%
01/07/2020 286.152008 32.50%
01/08/2020 498.320007 74.15%
01/09/2020 429.01001 -13.91%
01/10/2020 388.040009 -9.55%
01/11/2020 567.599976 46.27%
01/12/2020 705.669983 24.33%
01/01/2021 793.530029 12.45%
01/02/2021 675.5 -14.87%
01/03/2021 667.929993 -1.12%
01/04/2021 661.75 -0.93%
Beta 2.037176102  
Risk free rate 1.62% Long term treasury bond rate
Risk Premium 4.72% Equity risk premium for US securities in 2021
    (http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html)
CAPM 11.24%  
Stock Returns 6.23%  
     
Thus, the stock is giving lower returns in comparison to returns
calculated by CAPM model for assumption of market risk be investors.
Therefore, the securities are overvalued.
  S and P Returns  
Date Adj Close Returns
01/05/2016 2096.95  
01/06/2016 2098.86 0.09%
01/07/2016 2173.6 3.56%
01/08/2016 2170.95 -0.12%
01/09/2016 2168.27 -0.12%
01/10/2016 2126.15 -1.94%
01/11/2016 2198.81 3.42%
01/12/2016 2238.83 1.82%
01/01/2017 2278.87 1.79%
01/02/2017 2363.64 3.72%
01/03/2017 2362.72 -0.04%
01/04/2017 2384.2 0.91%
01/05/2017 2411.8 1.16%
01/06/2017 2423.41 0.48%
01/07/2017 2470.3 1.93%
01/08/2017 2471.65 0.05%
01/09/2017 2519.36 1.93%
01/10/2017 2575.26 2.22%
01/11/2017 2647.58 2.81%
01/12/2017 2673.61 0.98%
01/01/2018 2823.81 5.62%
01/02/2018 2713.83 -3.89%
01/03/2018 2640.87 -2.69%
01/04/2018 2648.05 0.27%
01/05/2018 2705.27 2.16%
01/06/2018 2718.37 0.48%
01/07/2018 2816.29 3.60%
01/08/2018 2901.52 3.03%
01/09/2018 2913.98 0.43%
01/10/2018 2711.74 -6.94%
01/11/2018 2760.17 1.79%
01/12/2018 2506.85 -9.18%
01/01/2019 2704.1 7.87%
01/02/2019 2784.49 2.97%
01/03/2019 2834.4 1.79%
01/04/2019 2945.83 3.93%
01/05/2019 2752.06 -6.58%
01/06/2019 2941.76 6.89%
01/07/2019 2980.38 1.31%
01/08/2019 2926.46 -1.81%
01/09/2019 2976.74 1.72%
01/10/2019 3037.56 2.04%
01/11/2019 3140.98 3.40%
01/12/2019 3230.78 2.86%
01/01/2020 3225.52 -0.16%
01/02/2020 2954.22 -8.41%
01/03/2020 2584.59 -12.51%
01/04/2020 2912.43 12.68%
01/05/2020 3044.31 4.53%
01/06/2020 3100.29 1.84%
01/07/2020 3271.12 5.51%
01/08/2020 3500.31 7.01%
01/09/2020 3363 -3.92%
01/10/2020 3269.96 -2.77%
01/11/2020 3621.63 10.75%
01/12/2020 3756.07 3.71%
01/01/2021 3714.24 -1.11%
01/02/2021 3811.15 2.61%
01/03/2021 3889.14 2.05%
01/04/2021 3756.07 -3.42%

Bond Valuation

Bond valuation    
     
Coupon Rate 5.30%

 


Coupon Rate 5.30%

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