Walmart Inc Present Value and the Risk/Return Trade-Off

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Module 1

Present Value and the Risk/Return Trade-Off
Walmart Inc. is one of the biggest retailers that was founded in the US but operates its
business in many countries dealing in a range of products that are offered in their hypermarkets,
grocery stores, and departmental store chains. The company was founded in 1962 and it is
headquartered in Bentonville, Arkansas. Walmart is very interesting to me because of how it has
managed to remain profitable and expand while its competitors like Sears have not been able to
withstand tuff times.
When it comes to stocks for this company, its beta stands at 0.64. Beta usually is used to
evaluate a stock's volatility when weighed against other companies in the market. The market is
assumed to have a beta of 1.0 and Walmart’s stands at 0.64 which means that it is a low risk
because it is below the market beta. This beta for Walmart also means that investing in its stock
will have low returns even though it is less risky ("Financial Concepts: The Risk/Return
Tradeoff", 2019).
Stock prices for this company for the past year have been oscillating between $105.56 as
the highest stock price and $82.40 as the lowest stock price. This translated to an average stock
price of $91.80 for the past one year (2019). The highest stock price was realized in November,
9th, 2018 while the lowest was recorded in May, 29th, 2018.for the past five years i.e. beginning
in March 2014, Walmart stock prices have oscillated between $56.42 per share and $108.39 per
share and an average of $79.09 was realized in this time period. In the year 2014 on March 14,
the stocks were at their lowest price for the year selling at $74.28 per share and the highest share
price for the year was realized on December 5th on which each share sold at $84.12. In the year
2015, the highest stock price was realized on January 15th where each share was selling at $86.77

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while the lowest was realized on November 13th, 2015 where each share was selling at $56.42
("Yahoo is now part of Oath", 2019). The year 2016 saw a gradual rise in the stock prices from
the dip that was experienced towards the end of 2015. The lowest share price was realized on
January 8th whereby each share sold at $63.54. The highest share price that year was 73.04$
which was realized on July 8th. In the year 2017, the stock prices began on a low recording the
lowest share price on January 20th where each share sold at $67.18. There was a steady increase
in the price and towards the end of the year, the shares were selling at about $100 per share
(2019). 2018 began on a high note and in January is when the highest stock price for the five
year period was realized with each share selling at $108.39. The shares then started going down
in price realizing the lowest share price in the month of May on 25 at $82.46 per share. From the
pattern that has been shown by the share prices over the past five years, the stock in a low...

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