As analysts at AXIS Capital, Ms. Shivangi Saxena and Ms.

Vartika
compute the expected price of Reliance Industries Ltd. at the end of
Asset Pricing Model (CAPM). For this purpose, they have been prov
values for BSE 500 Index and closing prices for Reliance Industries
Calculate the expected return on RIL stock and find the expected pr
February 2021. Consider the YTM on 10 year G-Sec issued by RBI
return on BSE 500 index for February 2021 i
nd Ms. Vartika Dixit have been asked to
at the end of February 2021 as per Capital
ave been provided monthly closing index
nce Industries Ltd. for the past one year.
e expected price of the stock at the end of
issued by RBI as 6.5% p.a. The expected
bruary 2021 is 3%.
 Adjusted Closing Price Data Simple Discrete Returns
Date BSE 500 Reliance Industries Ltd.
BSE 500
Jan-20 15649.81 1393.16
Feb-20 14627.62 1311.25 -6.53%
Mar-20 11098.23 1099.16 -24.13%
Apr-20 12721.00 1446.80 14.62%
May-20 12414.85 1458.92 -2.41%
Jun-20 13438.14 1697.73 8.24%
Jul-20 14346.18 2059.37 6.76%
Aug-20 14890.06 2080.70 3.79%
Sep-20 14851.00 2234.35 -0.26%
Oct-20 15215.01 2054.50 2.45%
Nov-20 16995.01 1929.80 11.70%
Dec-20 18300.10 1985.30 7.68%
Jan-21 17975.30 1841.95 -1.77%
Average Return 1.68%

Variance of BSE 500 0.0104

Variance (Excel) 0.0104

Beta of Reliance Industries Ltd.

Beta of Reliance Industries Ltd.

Return on 10 year G-Sec issued by RBI per an

Return on 10 year G-Sec issued by RBI per m
Expected Return on BSE 500 in February 20

Expected Return for Reliance Industries in February 20

Price of Reliance Industries at the end of Janua
Expected Price for Reliance Industries at end of February
 Simple Discrete Returns Deviations from Mean Product of Deviations
Reliance Industries Ltd. BSE 500 Reliance Industries Ltd.

-5.88% -8.21% -9.05%

-16.17% -25.81% -19.34%
31.63% 12.94% 28.46%
0.84% -4.08% -2.33%
16.37% 6.56% 13.20%
21.30% 5.08% 18.13%
1.04% 2.11% -2.13%
7.38% -1.94% 4.21%
-8.05% 0.77% -11.22%
-6.07% 10.02% -9.24%
2.88% 6.00% -0.29%
-7.22% -3.45% -10.39%
3.17% Sum
No. of Observations
Covariance
Covariance (Excel)

Covariance(BSE 500, Reliance)/Variance(BSE 500) 0.92

As per Excel's Slope Formula 0.92

on 10 year G-Sec issued by RBI per annum 6.50%

on 10 year G-Sec issued by RBI per month 0.54%
cted Return on BSE 500 in February 2021 3.00%

for Reliance Industries in February 2021 as per CAPM 2.80%

eliance Industries at the end of January 2021 1841.95
eliance Industries at end of February 2021 as per CAPM 1893.51
Product of Deviations
BSE 500*Reliance
Industries Ltd.
0.0074
0.0499
0.0368
0.0010
0.0087
0.0092
-0.0005
-0.0008
-0.0009
-0.0093
-0.0002
0.0036
0.1050
12
0.0095
0.0095
 Adjusted Closing Price Data Simple Discrete Returns
Date BSE 500 Reliance Industries Ltd.
BSE 500
Jan-20 15649.81 1393.16
Feb-20 14627.62 1311.25 -6.53%
Mar-20 11098.23 1099.16 -24.13%
Apr-20 12721.00 1446.80 14.62%
May-20 12414.85 1458.92 -2.41%
Jun-20 13438.14 1697.73 8.24%
Jul-20 14346.18 2059.37 6.76%
Aug-20 14890.06 2080.70 3.79%
Sep-20 14851.00 2234.35 -0.26%
Oct-20 15215.01 2054.50 2.45%
Nov-20 16995.01 1929.80 11.70%
Dec-20 18300.10 1985.30 7.68%
Jan-21 17975.30 1841.95 -1.77%
Average Return 1.68%

Variance of BSE 500 0.0104

Variance (Excel) 0.0104

Beta of Reliance Industries Ltd.

Beta of Reliance Industries Ltd.

Return on 10 year G-Sec issued by RBI per an

Return on 10 year G-Sec issued by RBI per m
Expected Return on BSE 500 in February 20

Expected Return for Reliance Industries in February 20

Price of Reliance Industries at the end of Janua
Expected Price for Reliance Industries at end of February
 Simple Discrete Returns Deviations from Mean
Reliance Industries Ltd. BSE 500 Reliance Industries Ltd.

-5.88% -8.21% -9.05%

-16.17% -25.81% -19.34%
31.63% 12.94% 28.46%
0.84% -4.08% -2.33%
16.37% 6.56% 13.20%
21.30% 5.08% 18.13%
1.04% 2.11% -2.13%
7.38% -1.94% 4.21%
-8.05% 0.77% -11.22%
-6.07% 10.02% -9.24%
2.88% 6.00% -0.29%
-7.22% -3.45% -10.39%
3.17% Sum
No. of Observations
Covariance
Covariance (Excel)

Covariance(BSE 500, Reliance)/Variance(BSE 500) 0.92

As per Excel's Slope Formula 0.92

on 10 year G-Sec issued by RBI per annum 6.50%

on 10 year G-Sec issued by RBI per month 0.54%
cted Return on BSE 500 in February 2021 3.00%

for Reliance Industries in February 2021 as per CAPM 2.80%

eliance Industries at the end of January 2021 1841.95
eliance Industries at end of February 2021 as per CAPM 1893.51
Product of Deviations
BSE 500*Reliance
Industries Ltd.
0.0074
0.0499
0.0368
0.0010
0.0087
0.0092
-0.0005
-0.0008
-0.0009
-0.0093
-0.0002
0.0036
0.1050
12
0.0095
0.0095