Macquarie Group Limited $($MQG$.$AX$).$

Analysis of company$$s share price using Capital Asset Pricing Model $(2024)$

a$)$ To calculate CAPM, you will first need to calculate the beta of the company with the market $($ASX$300).$

b$)$ Stock beta: Download $3$ years of weekly company share price returns and ASX$300$ market index returns ending financial year from Yahoo Finance $($or other data sources$)$ and estimate the stock beta.

c$)$ Does the estimate of stock beta make sense to you? $($The normal range of beta is from $0\mathrm{.}5$ to $3).$ Provide reasoning, why or why not? If not, you have to use the stock beta from Yahoo Finance for the later parts.

d$)$ Estimate the Expected Return using CAPM formula E$($R$)=$Rf$+$Beta$*[$E$($Rm$)-$Rf$]($This may be used for later part in calculating the DDM$).$ Assume the market return, Rm $=6\mathrm{.}5\%,$ and use the current $10-$year Government bond yield for the risk$-$free rate $=3\mathrm{.}5\%.$