# CPI CARD BETA ASSIGNMENT Harvard Case Solution & Analysis

## CPI card BETA ASSIGNMENT Case Study Solution

CPI Card Group

 Rubric Pts Assigned Max Points Understanding of what beta is 1 2 Conceptual determination of beta by looking at product 0 2 Regression beta computation 1.5 2 Discussion of t-statistic/confidence interval 0 2 Use of competitors to determine CPI Card beta 0 2 Conceptual determination of beta by looking at strategy 0 2 Additional discussion/ bonus points 1 1

3.5 out of 10

CPI card group was established in 1982, it's headquartered in Little on, Colorado. It is also located in the United States, Canada, and the United Kingdom. The company involves in producing, designing, packaging and tracking of smart cards.The company recently filed an IPO of 100 million dollars on August 7, 2015.

Beta of stock

To calculate the beta of CPI Card group, I have used following formula.

You should use regression – this formula won’t give you confidence limits on your estimate or the likelihood that the true beta is quite different.

The beta of any stock can be calculated by finding the market return deviation and stock return standard deviation. First stock return standard deviation is divided by market return deviation then multiply the number with the correlation of market and stock returns.

For market return variation and stock returns, I have taken the stock prices and data of S&P 500 from Yahoo Finance.After. that I have found the returns of the market and returns of the stock. After that I have taken data to find out the market deviation and the stock returns that were calculated by using the formula in the Excel.

CPI CARD BETA ASSIGNMENT Harvard Case Solution & Analysis

However,when the stock return standard deviation is divided by market return deviation, we get the number 27.15. After that, we found out the correlation between the market return and stock return that is 0.23.After looking at this number, we can say that there is weak positive correlation or relationship between the market return and stock return. Moreover,after finding correlation, we have to multiply the number with 27.15 which is the result of the division of market return standard deviation with stock return’s variation.

Finally, the CPI card group’s stock beta is 6.30. The beta value shows the volatility in the stock which is quite high and it shows a relatively higher value......................

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