Report Review
This report analyzes Marriott International, Inc. in terms of its risks and returns between August 1, 2015, and August 1, 2019. The first part of the examination concerned the company’s stock returns when compared to the market returns. The two values show generally similar behavior, though Marriott does not emulate some of NASDAQ Composite’s more significant increases and decreases. This tendency may be seen as an indication that Marriott’s stock is stable, particularly when compared to NASDAQ. The stock market is known for its volatility and high potential returns as well as significant risks, which may explain the spikes.
Beta of the Stock
The beta of the stock appears to match its slope against the market exactly, showing the same value until at least the fifth digit. The reason is likely that statistically, the two values represent the same concept. The beta can be defined as the slope of the stock’s linear regression against that of the market, though it is calculated differently. Overall, Marriott’s beta is close to 1, a trait that marks it as close to the market in its price changes. The finding confirms the notion of high stability established above.
Rate of Return
The required rate of return appears to be more reliant on the beta and the market risk premium than the risk-free rate. The larger size of the second formula argument, when compared to the first, is the most likely cause. The value responds to the two numbers in the same manner, likely as a result of the formula’s composition. Concerning sensitivity, the required rate of return appears to scale linearly with changes in each of the three variables. As such, it is equally responsive to both increases and decreases in each of the three different components of the formula.