Internet Exercises

Note: To do the following interactive exercise, your university library must subscribe to FP Analyzer.

Go to: http://www.fpdata.finpost.com/suite/ and click on “FP Corporate Analyzer”. Then login using the ID and Password for your university library. Alternatively, link to FP Corporate Analyzer from your university library’s home page. You may ask for directions from the reference librarian on how to access FP Corporate Analyzer (an e-reference source) from your university library’s home page.

After you login, you will first come across a “search” screen. In the box for “Stock Ticker Symbol”, enter CM and then click on “Search”. You will get a corporate profile of CIBC. On the first page, you should see a section on “Beta” under “Selected Ratios”. Note the beta for CIBC in the past year (52 Weeks Beta), past three years (36 Months Beta) and past five years (60 Months Beta). Then click on “Search” in the menu tab above and repeat the exercise for the following ticker symbols for the respective companies:

Stock Ticker Symbol RY TD BCE BBD.B

Company Royal Bank Toronto Dominion Bank BCE Inc. Bombardier Inc.

Compare the betas of the three banks (CM, RY, TD). Are there any significant differences in the reported beta coefficients? Are there discernible patterns in the movement of beta coefficients over the past year (52 Weeks Beta), past three years (36 Months Beta) and past five years (60 Months Beta) in the banking sector? What factors could lead to these differences and the discernible patterns in reported beta coefficients?

Next, compare the betas of the three banks with a communications conglomerate BCE Inc. and a manufacturing conglomerate Bombardier Inc. Are there any significant differences in the patterns of the movement of beta coefficients? Do beta coefficients (a measure of systematic risk) move more closely within an industry, or across different industries?