Mean STD DEV. VAR 2.963% 4.418% 5.908% 4.694% Return GSPO RETURN COS ReturnTGTRe
ID: 2794883 • Letter: M
Question
Mean STD DEV. VAR 2.963% 4.418% 5.908% 4.694% Return GSPO RETURN COS ReturnTGTReturn WMT Risk Free Return 1.022% 1.471% 0.776% 0.512% -0.796% 11.573% 3.379% -0.566% -0.052% 1.030% 4.228% 5.672% -0.397% 0.441% -0.973% -5.730% 2.096% 4.221% 9.344% 3.083% -1.502% -0.407% 3.471% -11.144% 1.696% 1.266% 1.327% -0.392% -10.479% 10.417% 2.509% 2.049% -8.081% 2.851% 0.088% 0.195% 0.349% 0.220% 4.358% 4.059% 3.133% -0.750% -6.265% 3.955% 1.260% 1.976% 2.424% 1.979% 0.285% -1.260% 4.607% 5.808% 2.885% 2.030% 10.330% 1.242% 1.757% 2.634% 1.727% 5.578% -4.720% 10.989% 1.026% 5.038% 2.186% 1.107% 1.139% 6.195% -4.727% 3.218% 2.457% 6.297% -4.870% 5.596% 3.952% -4.125% 3.582% 0.294% -0.437% 2.067% 3.324% 3.502% 6.424% 6.561% 3.324% 3.716% 3.588% 3.098% 11.730% 6.644% 6.756% -2.459% 2.203% 1.653% 3.999% -5.262% 3.090% 1.187% 5.722% 4.532% -3.706% 0.129% 4.632% -6.364% 1.958% 3.772% COST WMT Rf 5.043% 1.106% 3.599% 1.809% 2.076% 4.946% 2.975% 4.460% 2.805% 2.356% 3.558% 4.312% 0.693% 0.620% 2.103% 1.906% 1.508% 3.766% 1.551% 2.320% 2.453% 2.864% -4.543% 0.027% 2.316% 4.964% -3.688% 1.609% 1.985% 2.609% 1.952% -0.262% 14.776% 0.806% 5.286% 1.372% 19.702%Explanation / Answer
Risk Free rates are independent from the Market Rate of return and hence you cannot find the Risk free rate from the Given piece of information since these are the market indices and they represent some risk and hence these returns will normally be higher than the Risk free rate of return.
Hence you need to visit the treasury site of your government and google what the risk free rates of return have been in the past offered on securities issued by the government(risk free). Thus you can collect the past risk free rates( a set of rates) or you can simply choose the most recent risk free rate being offered at present on the governement security offerings. After that as you said you can convert that risk free rate into monthly rate by simply dividing it by 12 for any further analysis. So basically the annual rate offered on the securities issued by the government classify as the risk free rate("r") and there is no way you can find that rate using the given information.
I would also like to mention that if you are using an asset pricing model like the CAPM then you can find "r" by subsituting the other information in that equation like E(R) = r + Beta( E(Rm) - r) where Beta is the risk factor, E(Rm) is the Expected market return which is the calculated statistic in your spreadsheet. Beta can be found using the formula Beta = E(rm) - r / Standard deviation(market return)