Sherwin Williams

To: Dr. Aigbe Akhigbe From: Jorge Alfaro Subject: First Memo - Sherwin Williams (SHW) Risk and Return Measures regard: 3/07/2011 Rate of product: The three year prize of return for SHW from February 2008 to February 2011 was 19.03% (1.59% per month). In comparison Home Depots (HD) was 15.06% (1.25% a month) and Lowes ( rugged) was 7.42% (0.62% a month). In the same result the S&P 500 graze of return was only 2.14% (0.178% a month). This shows that the industry outperformed during the economic downturn. Expected graze of return: In a pessimistic scenario (a double lapse in the scrimping), the decline of the Retail (Home Improvement industry) should be deeper than of the economy as a whole. SHW is spared of the full effect because a hefty part of their business is done abroad and outside of this industry. Their competitors guess much more on their US operations. This is why the project decline in a worst case scenario is sharpie for HD and LOW than SHW. The normal case scenario is similar for the three companies and the trounce case scenario shows the potential of a boom in the US economy would benefit HD and LOW more than SHW.

The probability of separately scenario varies by club, based on the results of the last three historic period (which shows recession, and recovery years) SHW projects the best probability for positive year, while LOW the lowest. Based on these assumptions the Expected Rate of Return for SHW is 19.5%, 14% for HD and 7.31% for LOW. The S&P 500 projects a rate of 8%. Variance, Standard Deviation: The nature of the industry develop above makes the variance and standard release of HD (4.52% and 21.25%) and LOW (5.55% an 23.57%) higher(prenominal) than the S&P 500 (2.81% and 16.76%). SHW projects to be less(prenominal) changing than the market with a variance of 1.52% and standard deviation of 12.34%. This result is again based on the way the company performed during the last three years (Appendix B), and having a more alter business model. Coefficient of... If you want to get a full essay, determine it on our website: Orderessay

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