Corporate Finance: Instructor\'s Manual Applied Corporate Finance

(Amelia) #1
Aswath Damodaran 66

How risky is Disney? A look at the past...


Figure 3.4: Returns on Disney: 1999- 2003

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

Feb-99Apr-99Jun-99Aug-99Oct-99Dec-99Feb-00Apr-00Jun-00Aug-00Oct-00Dec-00Feb-01Apr-01Jun-01Aug-01Oct-01Dec-01Feb-02Apr-02Jun-02Aug-02Oct-02Dec-02Feb-03Apr-03Jun-03Aug-03Oct-03Dec-03
Month

Return on Disney (including dividends)

Disney’s stock price has been volatile, yielding a standard deviation of 32.31%


(on an annualized basis) between 19999 and 2003. If you were an investor


looking at Disney in 2004, what concerns (if any) would you have in using this


as your measure of the forward looking risk in Disney stock?

Free download pdf