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Exhibit 1 Consolidated Annual Income Statements for the Fiscal Year Ending in September
1997
Net Revenues
Transaction Income
Net Interest
Other
Total Net Revenues
1996
1995
51,936,902.00 $
18,193,946
7,107,492
77,238,340
36,469,561.00 $
11,477,878
6,391,314
54,338,753
19,290,808
3,320,262
5,623,468
5,422,839
13,970,834
59,000
363,002
7,763,014
55,813,227
14,049,642
2,530,642
3,685,535
2,889,654
7,537,265
148,014
363,002
4,717,406
35,921,160
8,481,977
2,516,796
2,352,590
1,626,725
4,842,392
1,428,663
94,152
2,846,280
24,189,575
21,425,113
18,417,593
10,830,028
7,602,964
7,259,248
3,798,881
13,822,149 $
11,158,345 $
7,031,147
Taxes
Net Income
EPS
Shares Outstanding
Source: Ameritrade Annual Report, 1997.
23,977,481.00
8,434,584
2,607,538
35,019,603
$1.00
$0.87
$0.55
13,768,889
12,813,823
12,813,823
Ameritrade
201-046
Exhibit 2 Consolidated Annual Balance Sheets for the Fiscal Year Ending in September
1997
ASSETS
Cash & Gash Equivalents
Cash & Investments Segregated in Compliance with Federal Regulations
Receivable from Brokers, Dealers, & Clearing Organizations
Receivable from Customers & Correspondents
Furniture, Equipment, & Leasehold Improvements
Goodwill
Equity Investments
Other Investments
Deferred Income Taxes
Other Assets
1996
53,522,447.00 $
319,763,921
17,823,640
325,407,147
8,709,923
6,346,763
7,597,972
5,000,000
39,314
13,145,616
15,767,170.00
175,668,497
15,096,862
166,075,055
3,746,178
6,709,765
7,157,783
5,000,000
444,378
6,013,544
757,356,743 $
401,679,232
1,404,999
666,279,440
19,252,931
3,430,279
1,193,479
356,942,970
7,221,008
4,853,000
806,711
Total Liabilities
690,367,649
371,017,168
Stockholders Equity:
Class A Common Stock
Class B Common Stock
Additional Paid in Capital
Retained Earnings
131,534
13,644
23,297,506
43,546,410
114,494
13,644
809,665
29,724,261
66,989,094
30,662,064
757,356,743 $
401,679,232
Total Assets
201-046
5.24%
5.59%
6.22%
6.34%
6.69%
6.61%
Historic Average Total Annual Returns on US Government Securities and Common Stocks (1950 -1996)
Average Annual Return
Standard Deviation
T-Bills
5.2%
3.0%
Intermediate Bonds a
6.4%
6.6%
Long Term Bonds b
6.0%
10.8%
Large Company Stocks c
14.0%
16.8%
Small Company Stocks d
17.8%
25.6%
Historic Average Total Annual Returns on US Government Securities and Common Stocks (1929 - 1996)
Average Annual Return
Standard Deviation
T-Bills
3.8%
3.3%
Intermediate Bonds a
5.4%
5.8%
Long Term Bonds b
5.5%
9.2%
Large Company Stocks c
12.7%
20.3%
Small Company Stocks d
17.7%
34.1%
Source: Yields are from Datastream, historical data are from lbbotson Associates, SBBI 2000 Yearbook.
a Portfolio of US Government bonds with maturity near 5 years.
b Portfolio of US Government bonds with maturity near 20 years.
c Standard and Poors 500 Stock Price Index.
d A subset of small cap stocks traded on the NYSE (1926-1981); Dimensional Fund Advisors Small Company Fund (1982-1997).
of Capital at Ameritrade
201-046
Debt/Value
(Market Values)
Current
Avg 1992-1996
0.00
0.60
0.05
0.00
0.79
0.00
0.57
0.57
0.00
0.51
0.00
0.05
NA
0.00
0.00
0.50
0.08
NA
NA
0.00 b
0.52
0.53
NA
0.53
0.00
0.04
0.38
NA
Debt/Value
(Book Values)
Current
Avg 1992-1996
0.00
0.69
0.25
0.00
0.80
0.00
0.77
0.70
0.00
0.63
0.00
0.07
NA
0.00
0.00
0.60
0.30
NA
0.79 b
0.00 b
0.65
0.63
NA
0.58
0.00
0.06
0.70 c
NA
Brokerage
Revenues (%)
57
35
82
95
13
0
37
12
0
46
81
51
99
0
-7-
These companies
are similar to
Ameritrade
201-046
Exhibit 5
Date
31-Mar-97
30-Apr-97
30-May-97
30-Jun-97
31-Jul-97
29-Aug-97
Date
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31 -Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
30-Dec-88
29-Jan-89
29-Feb-89
32 -Mar-88
29-Apr-89
31-May-89
30-Jun-89
29-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
30-Dec-89
29-Jan-90
Shares
13,153
13,153
13,153
14,518
14,518
14,518
Ameritrade
Price
Dividend
Stock Split
15.625
12.500
14.000
15.750
15.375
18.813
Charles Schwab
Shares
Price
Dividend
29,121
15.875
29,121
7.875
29,121
6.625
25,388
6.000
25,388
6.500
25,388
9.000
25,388
7.375
25,388
7.625
25,388
6.875
25,294
7.250
25,294
7.500
25,294
6.750
25,328
6.750
25,328
7.500
25,328
6.750
25,354
6.750
25,354
10.250
25,354
8.625
25,354
8.875
25,354
10.125
25,354
11.750
0.030
25,352
11.000
25,352
16.500
0.030
25,352
15.750
25,386
14.000
25,386
13.000
0.030
25,386
12.500
25,332
13.875
25,332
13.500
0.030
-0.200
0.120
0.125
-0.024
0.224
Stock Split
-0.504
-0.159
-0.094
0.083
0.385
-0.181
0.034
-0.098
0.055
0.034
-0.100
0.000
0.111
-0.100
0.000
0.519
-0.159
0.029
0.1408
0.1635
-0.0638
0.5027
-0.0455
-0.1111
-0.0693
-0.0385
0.1100
-0.0249
29-Feb-90
33 -Mar-88
29-Apr-90
31-May-90
30-Jun-90
29-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
30-Dec-90
29-Jan-91
29-Feb-91
34 -Mar-88
29-Apr-91
31-May-91
30-Jun-91
29-Jul-91
31-Aug-91
30-Sep-91
31-Oct-91
30-Nov-91
30-Dec-91
29-Jan-92
29-Feb-92
35 -Mar-88
29-Apr-92
31-May-92
30-Jun-92
29-Jul-92
31-Aug-92
30-Sep-92
31-Oct-92
30-Nov-92
30-Dec-92
29-Jan-93
29-Feb-93
36 -Mar-88
29-Apr-93
31-May-93
30-Jun-93
29-Jul-93
31-Aug-93
30-Sep-93
31-Oct-93
30-Nov-93
30-Dec-93
29-Jan-94
29-Feb-94
37 -Mar-88
29-Apr-94
31-May-94
25,332
25,332
25,332
25,332
25,099
25,099
25,099
25,255
25,255
25,255
24,464
24,464
24,464
24,464
24,464
24,464
24,435
24,435
24,435
25,596
25,596
25,596
38,394
38,394
38,394
38,479
38,479
38,479
38,626
38,626
38,626
38,149
38,149
38,149
37,741
37,741
37,741
37,741
37,741
37,741
56,612
56,612
56,612
57,625
57,625
57,815
57,815
57,815
57,815
57,815
57,815
57,815
15.250
17.000
15.125
15.750
15.250
13.625
12.625
11.375
12.625
11.875
11.375
16.000
18.250
20.250
18.125
22.500
24.750
27.500
28.375
31.125
37.750
32.750
30.375
31.875
33.250
34.625
28.500
28.875
23.500
24.625
22.500
18.000
20.250
24.875
26.125
30.250
32.375
36.500
32.750
35.250
28.500
29.000
32.875
34.500
34.625
31.875
32.375
29.500
27.500
26.875
28.375
30.250
0.030
0.030
0.040
0.040
0.040
0.050
0.060
3 for 2
0.040
0.060
0.060
0.060
0.060
0.075
3 for 2
0.050
0.050
0.070
0.070
0.1296
0.1148
-0.1085
0.0413
-0.0317
-0.1046
-0.0734
-0.0990
0.1134
-0.0594
-0.0421
0.4101
0.1406
0.1096
-0.103
0.241
0.100
0.113
0.032
0.097
0.215
-0.132
0.391
0.051
0.043
0.041
-0.175
0.013
-0.186
0.050
-0.086
-0.200
0.128
0.228
0.050
0.160
0.070
0.127
-0.101
0.076
0.213
0.019
0.134
0.049
0.005
-0.079
0.016
-0.087
-0.068
-0.023
0.058
0.066
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
30-Dec-94
29-Jan-95
29-Feb-95
38 -Mar-88
29-Apr-95
31-May-95
30-Jun-95
29-Jul-95
31-Aug-95
30-Sep-95
31-Oct-95
30-Nov-95
30-Dec-95
29-Jan-96
29-Feb-96
39 -Mar-88
29-Apr-96
31-May-96
30-Jun-96
29-Jul-96
31-Aug-96
30-Sep-96
31-Oct-96
30-Nov-96
30-Dec-96
29-Jan-97
29-Feb-97
40 -Mar-88
29-Apr-97
31-May-97
30-Jun-97
29-Jul-97
31-Aug-97
57,114
57,114
57,114
56,829
56,829
57,325
57,325
57,325
57,325
85,988
85,988
85,988
85,896
85,896
87,061
174,122
174,122
174,678
174,678
174,678
174,678
174,678
174,032
174,032
174,989
174,989
174,989
175,166
175,166
175,166
175,173
175,173
175,173
175,173
175,068
175,068
175,813
176,422
176,422
24.750
26.750
30.750
29.625
35.375
31.875
34.875
40.000
44.375
32.250
34.250
35.000
43.875
46.125
46.625
29.000
22.875
24.250
20.125
25.125
25.500
25.875
24.500
24.250
24.500
24.125
25.000
23.000
25.000
30.250
32.000
37.500
37.500
32.000
36.625
40.625
40.500
47.000
42.750
0.070
0.070
0.090
3 for 2
0.060
0.080
2 for 1
0.040
0.040
0.040
0.050
0.050
0.050
0.050
0.050
-0.182
0.084
0.150
-0.037
0.196
-0.099
0.094
0.150
0.109
0.090
0.064
0.022
0.254
0.053
0.011
0.244
-0.210
0.060
-0.170
0.250
0.015
0.015
-0.052
-0.010
0.010
-0.013
0.036
-0.080
0.089
0.210
0.058
0.172
0.001
-0.147
0.145
0.111
-0.003
0.160
-0.089
0.036
0.148
Date
30-Aug-96
30-Sep-96
31-Oct-96
29-Nov-96
31-Dec-96
31-Jan-97
Shares
29,393
29,539
29,539
29,539
29,545
29,545
E*Trade
Price
Dividend
10.500
13.188
11.125
10.938
11.500
17.625
Stock Split
0.256
-0.156
-0.017
0.051
0.533
Jan 92-Dec 96
0.03345
0.11513
28-Feb-97
31-Mar-97
30-Apr-97
30-May-97
30-Jun-97
31-Jul-97
29-Aug-97
Date
31-Jan-84
29-Feb-84
30-Mar-84
30-Apr-84
31-May-84
29-Jun-84
31-Jul-84
31-Aug-84
28-Sep-84
31-Oct-84
30-Nov-84
31-Dec-84
31-Jan-85
29-Feb-85
30-Mar-85
30-Apr-85
31-May-85
29-Jun-85
31-Jul-85
31-Aug-85
28-Sep-85
31-Oct-85
30-Nov-85
31-Dec-85
31-Jan-86
29-Feb-86
30-Mar-86
30-Apr-86
31-May-86
29-Jun-86
31-Jul-86
31-Aug-86
28-Sep-86
31-Oct-86
30-Nov-86
31-Dec-86
31-Jan-87
29-Feb-87
29,545
30,440
30,440
30,440
30,958
30,958
30,958
Shares
24.000
18.000
15.000
17.625
19.625
30.500
32.125
0.362
-0.250
-0.167
0.175
0.113
0.554
0.053
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
11,149
11,149
11,149
11,149
11,149
11,149
11,149
11,149
11,149
11,149
17.625
15.000
14.875
17.125
17.375
18.000
14.750
18.000
17.000
17.875
15.250
15.500
23.375
23.750
23.125
20.625
22.625
24.000
24.125
22.875
20.125
22.250
25.500
32.500
36.375
39.125
39.000
30.375
33.375
35.500
29.000
28.750
23.875
32.125
29.500
26.750
36.125
36.875
0.050
0.050
0.050
0.050
0.110
0.060
0.060
0.060
0.170
0.070
0.070
0.070
0.200
Stock Split
-0.146
-0.008
0.151
0.015
0.039
-0.181
0.224
-0.056
0.051
-0.144
0.016
0.508
0.021
-0.026
-0.108
0.100
0.061
0.005
-0.049
-0.120
0.106
0.149
0.275
0.119
0.080
-0.003
-0.221
0.101
0.064
-0.183
-0.006
-0.170
0.346
-0.080
-0.093
0.350
0.026
30-Mar-87
30-Apr-87
31-May-87
29-Jun-87
31-Jul-87
31-Aug-87
28-Sep-87
31-Oct-87
30-Nov-87
31-Dec-87
31-Jan-88
29-Feb-88
30-Mar-88
30-Apr-88
31-May-88
29-Jun-88
31-Jul-88
31-Aug-88
28-Sep-88
31-Oct-88
30-Nov-88
31-Dec-88
31-Jan-89
29-Feb-89
30-Mar-89
30-Apr-89
31-May-89
29-Jun-89
31-Jul-89
31-Aug-89
28-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
29-Feb-90
30-Mar-90
30-Apr-90
31-May-90
29-Jun-90
31-Jul-90
31-Aug-90
28-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90
31-Jan-91
29-Feb-91
30-Mar-91
30-Apr-91
31-May-91
29-Jun-91
11,149
16,724
16,724
9,477
9,477
9,477
9,477
9,477
9,477
9,477
9,477
9,477
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,437
9,437
9,437
9,210
9,210
9,210
9,452
36.000
21.375
21.500
19.250
20.250
24.625
23.000
12.125
11.625
12.500
12.625
13.500
12.250
12.625
11.500
11.875
11.500
11.250
11.750
11.750
11.500
10.875
15.000
13.750
13.250
13.000
16.125
14.000
16.500
17.000
16.750
15.750
14.875
13.625
12.000
13.625
13.250
13.000
15.250
14.000
13.500
11.375
10.375
9.750
10.125
10.250
13.125
16.125
18.875
17.500
17.750
17.000
3 for 2
0.055
0.055
0.055
0.180
0.060
0.060
0.060
0.060
0.060
0.060
0.060
0.130
0.070
0.070
0.070
0.070
0.070
-0.024 x
-0.109
0.008
-0.105
0.052
0.219
-0.066
-0.473
-0.037
0.075
0.010
0.084
-0.093
0.031
-0.084
0.033
-0.032
-0.017
0.044
0.000
-0.016
-0.054
0.379
-0.079
-0.036
-0.019
0.245
-0.132
0.179
0.034
-0.015
-0.060
-0.052
-0.084
-0.119
0.146
-0.028
-0.019
0.178
-0.082
-0.036
-0.152
-0.088
-0.060
0.046
0.012
0.280
0.234
0.171
-0.073
0.018
-0.042
y
3
31-Jul-91
31-Aug-91
28-Sep-91
31-Oct-91
30-Nov-91
31-Dec-91
31-Jan-92
29-Feb-92
30-Mar-92
30-Apr-92
31-May-92
29-Jun-92
31-Jul-92
31-Aug-92
28-Sep-92
31-Oct-92
30-Nov-92
31-Dec-92
31-Jan-93
29-Feb-93
30-Mar-93
30-Apr-93
31-May-93
29-Jun-93
31-Jul-93
31-Aug-93
28-Sep-93
31-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
29-Feb-94
30-Mar-94
30-Apr-94
31-May-94
29-Jun-94
31-Jul-94
31-Aug-94
28-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94
31-Jan-95
29-Feb-95
30-Mar-95
30-Apr-95
31-May-95
29-Jun-95
31-Jul-95
31-Aug-95
28-Sep-95
31-Oct-95
9,452
9,452
9,210
9,210
9,210
9,220
9,220
9,220
9,292
9,292
9,292
9,292
9,292
9,292
9,884
9,884
9,884
9,884
9,884
9,884
9,824
9,824
9,824
10,315
10,623
10,623
10,643
10,643
10,678
11,212
10,678
11,238
11,238
11,238
11,238
11,168
11,168
11,121
11,121
11,111
11,111
11,111
11,075
11,075
11,075
11,075
11,075
16,613
16,613
16,613
16,613
24,920
19.625
20.625
19.250
20.375
20.000
27.750
27.500
28.500
28.625
21.500
21.500
21.000
20.125
19.625
20.125
21.000
25.375
24.750
27.000
26.000
27.125
25.125
26.125
28.875
30.750
35.000
36.250
35.875
34.250
35.750
35.375
28.375
25.625
26.375
26.875
25.375
24.750
29.250
25.875
25.750
24.750
28.375
30.875
35.000
35.500
40.625
47.000
36.625
38.500
37.375
45.875
23.750
0.070
0.070
0.180
0.080
0.080
0.080
0.220
0.100
1.443
0.100
0.100
1.788
0.270
0.120
0.120
0.120
0.290
0.150
3for2
0.100
3 for 2
0.154
0.055
-0.067
0.058
-0.015
0.388
-0.009
0.043
0.004
-0.249
0.004
-0.023
-0.042
-0.021
0.025
0.043
0.212
-0.025
0.091
-0.029
0.043
-0.074
0.044
0.160
0.065
0.141
0.036
-0.010
-0.043
0.096
-0.010
-0.190
-0.097
0.029
0.024
-0.056
-0.025
0.187
-0.115
-0.005
-0.034
0.146
0.088
0.143
0.014
0.144
0.157
0.174
0.051
-0.027
0.227
-0.223
30-Nov-95
31-Dec-95
31-Jan-96
29-Feb-96
30-Mar-96
30-Apr-96
31-May-96
29-Jun-96
31-Jul-96
31-Aug-96
28-Sep-96
31-Oct-96
30-Nov-96
31-Dec-96
31-Jan-97
29-Feb-97
30-Mar-97
30-Apr-97
31-May-97
29-Jun-97
31-Jul-97
31-Aug-97
Date
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
30-Dec-88
31-Jan-89
28-Feb-89
31 -Mar-89
28-Apr-89
24,952
24,952
25,056
25,056
25,056
25,056
25,056
25,056
25,178
25,178
25,178
25,178
25,178
25,178
25,173
25,173
37,760
37,760
37,760
38,606
38,664
38,664
25.375
20.500
23.250
26.250
29.500
30.500
33.875
32.500
28.375
29.250
26.500
26.250
28.375
29.875
36.625
35.000
20.875
22.125
23.000
23.250
26.250
34.250
0.070
0.080
0.070
0.080
0.080
0.190
3 for 2
0.060
0.060
0.071
-0.192
0.134
0.132
0.124
0.034
0.113
-0.041
-0.127
0.034
-0.094
-0.009
0.084
0.053
0.226
-0.039
-0.105
0.060
0.042
0.011
0.129
0.307
Stock Split
0.153
0.031
-0.091
0.067
-0.219
-0.040
-0.125
-0.143
0.056
0.263
-0.021
0.064
-0.200
-0.300
-0.071
0.231
-0.156
0.037
-0.214
0.364
0.000
0.267
-0.105
31-May-89
30-Jun-89
31 -Jul-89
31-Aug-89
29-Sep-89
31-Oct-89
30-Nov-89
29-Dec-89
31-Jan-90
28-Feb-90
30-Mar-90
30-Apr-90
31-May-90
29-Jun-90
31-Jul-90
31-Aug-90
28-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90
31 -Jan-91
28-Feb-91
28-Mar-91
30-Apr-91
31-May-91
28-Jun-91
31-Jul-91
30-Aug-91
30-Sep-91
31-Oct-91
29-Nov-91
31 -Dec-91
31 -Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31 -Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31 -Aug-93
2,420
2,420
2,420
2,419
2,419
2,419
2,417
2,417
2,417
2,420
2,420
2,420
2,572
2,572
2,572
2,377
2,377
2,377
2,370
2,370
2,370
2,320
2,320
2,320
2,320
2,900
2,900
2,943
2,943
2,943
2,943
2,943
2,943
4,415
4,466
4,466
4,466
4,466
4,466
4,466
4,847
4,847
4,847
4,847
4,847
4,847
6,071
6,071
6,071
6,072
6,072
6,072
5.000
6.000
6.000
5.750
5.625
5.375
5.000
4.500
4.375
3.750
4.250
4.375
4.250
4.750
4.625
4.375
4.250
4.000
3.750
3.625
3.750
4.500
6.125
7.000
8.250
8.000
10.375
10.750
14.250
14.000
15.500
27.500
26.500
21.750
25.375
20.625
21.750
17.125
17.625
13.750
14.375
15.625
20.750
20.500
25.250
24.375
20.500
18.500
27.250
33.500
33.000
42.625
0.120
0.150
5 for 4
0.160
3 for 2
0.200
5 for 4
0.250
0.176
0.200
0.000
-0.022
-0.022
-0.044
-0.070
-0.100
-0.028
-0.143
0.133
0.029
-0.029
0.118
-0.026
-0.022
-0.029
-0.059
-0.063
-0.033
0.034
0.200
0.361
0.143
0.179
0.212
0.297
0.052
0.326
-0.018
0.107
0.774
-0.036
0.231
0.167
-0.187
0.055
-0.213
0.029
-0.209
0.045
0.087
0.328
-0.012
0.232
-0.035
0.051
-0.098
0.473
0.229
-0.015
0.299
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
30-Dec-94
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29- Dec-95
31-Jan-96
29- Feb-96
29-Mar-96
30-Apr-96
31-May-96
28-Jun-96
31-Jul-96
30-Aug-96
30-Sep-96
6,072
6,072
9,108
9,150
9,150
9,150
9,150
9,150
9,150
9,150
9,150
9,150
9,150
9,150
9,150
9,154
9,154
9,154
9,154
9,154
9.154
9,154
9,154
9,154
11,442
11,442
11,442
11,452
11,452
11,452
11,452
11,452
11,458
11,458
11,501
11,501
11,501
50.125
47.250
25.750
21.250
21.250
20.500
17.625
16.000
15.250
13.375
13.000
17.000
14.125
16.125
14.250
12.250
14.500
17.375
16.125
16.125
17.500
23.000
27.625
28.625
25.500
19.750
19.750
24.750
23.625
24.625
33.375
36.250
36.625
37.125
37.625
37.375
37.875
3 for 2
0.200
0.250
5 for 4
0.220
0.176
-0.057
-0.183
-0.175
0.000
-0.035
-0.140
-0.092
-0.047
-0.123
-0.028
0.323
-0.169
0.142
-0.116
-0.140
0.184
0.198
-0.072
0.000
0.085
0.314
0.201
0.045
0.114
-0.225
0.000
0.253
-0.045
0.042
0.355
0.086
0.010
0.014
0.013
-0.001
0.013
Ameritrade
Split adjustment
Exhibit 6 Stock Return Data for Investment Service Firms, Internet Firms, and the Aggregate Stock Market
Date
31-Jan-84
29-Feb-84
30-Mar-84
30-Apr-84
31-May-84
29-Jun-84
31-Jul-84
31-Aug-84
28-Sep-84
31-Oct-84
30-Nov-84
31-Dec-84
31-Jan-85
28-Feb-85
29-Mar-85
30-Apr-85
31-May-85
28-Jun-85
31-Jul-85
30-Aug-85
30-Sep-85
31-Oct-85
29-Nov-85
31-Dec-85
31-Jan-86
28-Feb-86
31-Mar-86
30-Apr-86
30-May-86
30-Jun-86
31-Jul-86
29-Aug-86
30-Sep-86
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
A G Edwards
0.026040
-0.111680
-0.042290
0.012050
-0.017860
0.100610
0.016670
0.178140
-0.032710
0.024150
-0.066040
-0.017170
0.331610
-0.007780
-0.036860
-0.094260
0.085970
0.102500
-0.064640
-0.036590
-0.132490
0.088240
0.099100
0.141800
0.039710
0.149310
0.083990
-0.086830
0.026070
-0.066370
-0.067630
0.104660
-0.094340
0.151040
-0.022620
-0.040740
0.334950
0.000000
0.044950
-0.122380
-0.023900
-0.104650
0.073390
0.027180
-0.071130
-0.337840
-0.174420
0.033330
Bear Stearns
-0.103450
0.193590
0.156760
0.130840
0.128720
0.065640
0.003620
-0.168520
-0.141920
0.160310
-0.145530
0.217050
-0.057320
-0.102160
0.318180
-0.022990
-0.024650
-0.121020
-0.028990
0.022090
-0.007350
0.103700
0.080270
-0.400000
-0.145830
0.023900
Lehman Bros
Mecklermedia
Merrill Lynch
-0.013280
-0.167330
-0.019140
-0.011710
-0.044780
0.119790
-0.076280
0.304570
-0.077820
0.023630
-0.091290
-0.013700
0.277780
-0.023190
-0.085820
-0.034290
0.089360
0.011720
0.040930
-0.052240
-0.141730
0.100920
0.127500
0.022300
0.152730
0.036590
0.012230
-0.102720
-0.008080
-0.054610
-0.039710
0.145110
-0.052810
0.195120
-0.074050
-0.075950
0.198630
-0.015430
-0.002920
-0.152050
-0.041380
0.010870
0.100360
0.032570
-0.031750
-0.357380
-0.153060
0.091460
Morgan
Stanley Dean
Witter
0.051150
0.013420
-0.062910
-0.070670
0.149050
-0.119400
0.160830
-0.030890
-0.129190
0.112910
-0.048610
0.036500
0.005280
0.020320
-0.003440
0.023490
0.069370
0.023730
-0.337560
-0.163930
0.148460
Netscape
Paine
Webber
-0.042860
-0.175370
0.073300
0.080510
-0.113730
0.084960
-0.090160
0.189190
-0.105300
0.029790
-0.041320
-0.046550
0.431820
-0.022220
0.026620
-0.123810
0.065220
-0.040140
-0.092530
-0.038430
-0.049180
0.008620
0.197440
0.003580
0.107140
0.068390
0.036360
-0.137430
0.051530
-0.116500
-0.010990
0.175930
-0.015590
0.172690
-0.075210
-0.063200
0.178570
-0.033540
-0.003500
-0.084210
-0.061150
0.020490
0.052210
0.023050
-0.029960
-0.474900
-0.021760
-0.128790
Raymond
James
0.040000
-0.102560
-0.050000
-0.067670
-0.072580
-0.043480
0.018180
0.214290
-0.029410
0.015150
-0.179100
-0.054550
0.430770
0.027030
0.013160
-0.025970
0.013330
0.039470
0.017720
0.025000
-0.048780
0.000000
0.256410
0.015920
0.288890
0.103450
0.171880
-0.100000
-0.007410
-0.040600
-0.187500
0.038460
-0.092590
0.081630
-0.056600
-0.026800
0.319590
0.289060
0.261940
-0.116400
-0.101800
-0.031200
-0.062070
0.169120
-0.142640
-0.352940
-0.113640
-0.038460
Yahoo
VW NYSE,
AMEX, &
Nasdaq a
-0.012910
-0.039170
0.013450
0.002730
-0.052350
0.023590
-0.020350
0.112570
0.000390
0.000130
-0.010620
0.023790
0.085730
0.017000
-0.001930
-0.002180
0.055870
0.017190
-0.000540
-0.004800
-0.039650
0.044570
0.069270
0.043060
0.009860
0.072840
0.053880
-0.008060
0.050810
0.014300
-0.059690
0.066390
-0.079140
0.049440
0.015170
-0.026540
0.128370
0.047630
0.023240
-0.017130
0.005220
0.043830
0.044050
0.037230
-0.020740
-0.224870
-0.072900
0.070410
EW NYSE,
AMEX, &
Nasdaq a
0.005760
-0.053810
0.007100
-0.019420
-0.050770
0.013800
-0.047450
0.089620
0.000270
-0.020890
-0.031410
0.005050
0.122760
0.047140
-0.008530
-0.011290
0.022930
0.003470
0.019510
-0.003410
-0.056140
0.018960
0.053270
0.029130
0.043400
0.062360
0.047720
0.015840
0.036630
0.008960
-0.073610
0.022110
-0.060490
0.024620
-0.006280
-0.034530
0.116820
0.074950
0.033090
-0.019610
0.000710
0.022010
0.034700
0.015590
-0.015510
-0.270850
-0.052300
0.027940
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
30-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
29-Sep-89
31-Oct-89
30-Nov-89
29-Dec-89
31-Jan-90
28-Feb-90
30-Mar-90
30-Apr-90
31-May-90
29-Jun-90
31-Jul-90
31-Aug-90
28-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90
31-Jan-91
28-Feb-91
28-Mar-91
30-Apr-91
31-May-91
28-Jun-91
31-Jul-91
30-Aug-91
30-Sep-91
31-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
0.080650
0.062390
-0.035460
0.029410
-0.042860
0.159400
-0.006490
-0.039220
0.084080
-0.006330
-0.057320
0.042970
0.169930
-0.044690
-0.038830
-0.006130
0.154320
-0.003420
0.178380
0.087160
0.008270
-0.148150
0.103260
-0.096750
-0.115380
0.055900
0.137410
-0.104170
0.203490
-0.007920
-0.058820
-0.081460
-0.268570
0.046880
0.119400
0.095730
0.202450
0.168370
0.136940
0.019310
0.075760
-0.099720
0.198820
0.025220
0.202900
0.076310
-0.126870
0.299660
-0.056110
-0.066430
-0.088760
-0.163220
0.098770
-0.078430
-0.006130
0.043460
0.144580
0.157890
-0.054550
0.019420
-0.085710
0.093750
-0.067310
-0.041240
0.028670
0.084210
0.029130
-0.038100
0.178220
0.001010
0.025420
-0.041320
0.068710
0.034190
0.107440
0.034850
-0.083970
-0.075000
-0.034950
0.009430
-0.028040
0.060770
-0.038460
-0.020000
0.179290
-0.009170
-0.083330
-0.097780
-0.142860
-0.097220
0.124920
0.125000
0.135800
0.142610
0.125000
0.034190
0.094630
-0.128000
0.110090
-0.014880
0.016950
0.058330
-0.039760
0.182610
0.066180
0.080000
-0.077420
-0.006990
0.006690
-0.022220
-0.045450
-0.014290
0.072630
0.062500
-0.064360
0.000000
0.031750
0.113990
0.013950
-0.050460
0.039020
0.051640
-0.049550
-0.090050
0.270830
-0.037190
-0.047210
0.040540
0.060610
-0.061730
0.232460
-0.039430
-0.108210
-0.025100
-0.086580
-0.004740
-0.133330
0.000000
-0.033330
-0.034480
0.138550
-0.047620
0.061110
-0.132280
-0.091460
-0.046980
0.107140
0.070970
0.186750
0.172590
0.218340
0.089610
0.086090
-0.064020
0.081430
0.018180
0.148810
0.072540
-0.067630
0.231770
-0.031710
-0.019650
-0.015660
-0.109090
-0.004080
0.041240
0.019800
-0.030580
-0.019510
0.168660
0.055560
0.106880
-0.086240
0.275100
0.004720
-0.015720
-0.003190
0.051280
-0.036700
0.053970
0.078310
0.032400
0.006110
-0.055060
0.137630
-0.017010
0.110000
0.062610
-0.063830
-0.069580
0.050940
-0.071810
-0.077370
0.029540
0.008200
0.028460
0.129220
0.024650
-0.163230
-0.068180
-0.121950
-0.012630
0.092780
0.025940
0.101150
0.184870
0.177300
-0.015060
0.087560
-0.103110
0.161200
0.029970
0.063490
0.081290
-0.016170
0.197180
-0.110040
-0.008850
-0.013390
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0.050690
-0.024330
0.097260
-0.075180
0.113040
0.109690
-0.078010
-0.038460
0.032320
0.070310
-0.036500
0.038180
0.036760
-0.028370
-0.065400
0.015750
0.116280
0.028060
-0.047620
0.014290
0.070700
-0.026490
0.258500
0.016430
-0.160430
-0.121020
-0.014200
0.000000
-0.037040
0.038770
0.044780
-0.042860
0.119700
0.013420
-0.066230
-0.113190
-0.096770
-0.151790
0.126740
0.037740
0.054550
0.319310
0.197370
0.054950
-0.041460
-0.142080
0.095540
0.081630
0.118920
0.202900
-0.152610
0.335070
-0.016040
0.080430
-0.045450
-0.142860
0.049140
0.023670
0.069360
-0.135350
0.137600
-0.035290
0.089270
-0.067420
-0.048190
-0.008610
0.025640
-0.050000
0.017370
0.157630
-0.069770
0.105000
0.193180
0.051430
-0.009090
0.018350
0.090090
0.069420
0.147290
-0.013510
0.009590
-0.122450
0.015500
-0.061070
-0.012360
0.148760
0.075400
-0.013420
0.118910
-0.036590
0.000000
-0.101270
-0.116340
-0.048000
0.084030
0.144500
0.074830
0.219240
0.270830
0.057380
0.063950
-0.041090
0.034290
0.038670
0.114260
0.105260
-0.125540
0.217820
0.165530
-0.003500
0.128840
-0.135510
-0.086490
-0.014910
0.006020
-0.071860
0.045340
0.051610
-0.017060
0.011000
0.000940
0.051390
-0.007180
-0.027940
0.037280
0.017650
-0.016400
0.020800
0.065940
-0.016360
0.021550
0.048530
0.039650
-0.004980
0.077720
0.022280
-0.001750
-0.029380
0.017850
0.018280
-0.070050
0.014980
0.024150
-0.028160
0.088870
-0.004300
-0.009380
-0.091730
-0.053870
-0.012420
0.065980
0.029540
0.049040
0.075690
0.028780
0.003350
0.040590
-0.044240
0.046830
0.026910
-0.011060
0.017720
-0.037270
0.107040
-0.001650
0.013290
-0.023680
0.013850
0.006520
-0.019240
0.039930
-0.020760
0.078110
0.062010
0.034370
0.015250
-0.017020
0.048480
0.000550
-0.023710
0.018700
-0.011780
-0.036700
0.019540
0.063130
0.002790
0.017030
0.030680
0.027370
-0.008330
0.031610
0.019290
0.004470
-0.050950
-0.008220
-0.012170
-0.045810
0.015750
0.022040
-0.026720
0.046650
0.005380
-0.027290
-0.109790
-0.080490
-0.056330
0.036650
-0.003870
0.085250
0.133650
0.077820
0.031020
0.030340
-0.034500
0.034920
0.028570
0.008670
0.023860
-0.025390
0.036450
0.149480
0.052010
-0.014120
-0.032890
0.005500
-0.039700
0.027280
-0.024440
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
30-Dec-94
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
31-Jan-96
29-Feb-96
29-Mar-96
30-Apr-96
31-May-96
28-Jun-96
31-Jul-96
30-Aug-96
30-Sep-96
31-Oct-96
29-Nov-96
31-Dec-96
31-Jan-97
28-Feb-97
31-Mar-97
30-Apr-97
-0.071430
0.115380
0.166670
-0.063840
0.089950
-0.019420
0.080200
-0.050690
-0.052430
0.051550
0.063730
0.010140
0.082570
0.046610
-0.032390
-0.032970
0.016300
-0.048130
-0.190340
-0.013990
0.071770
-0.080000
0.014490
0.150000
-0.086210
0.013700
-0.060000
0.043480
0.020830
0.224490
-0.016000
0.039770
-0.010930
0.000660
0.088890
-0.005100
0.098050
-0.042250
0.065100
-0.115740
0.052360
-0.034830
0.032370
-0.055280
0.090430
0.064780
0.009220
0.022830
0.045890
0.025750
0.046030
0.081120
0.011150
0.044120
-0.128730
0.138210
0.016260
0.024000
0.100390
0.045110
-0.014390
-0.005840
0.081480
0.089040
0.133330
0.050280
0.026600
0.039900
0.042110
-0.111110
0.018180
-0.016850
0.114290
-0.106670
-0.098270
0.083330
0.019820
-0.165640
-0.051470
0.141090
-0.123290
0.015630
-0.029230
-0.016000
0.081300
0.136840
-0.013330
0.114860
0.038180
0.055560
0.035090
-0.061020
0.042420
-0.075580
0.101890
-0.086210
0.157230
0.060870
0.020620
0.015150
0.014180
-0.020730
-0.047620
0.045560
-0.005350
0.016130
0.170370
0.013640
0.076230
0.055000
-0.125000
0.161900
-0.166670
0.050000
0.039680
-0.092310
0.050850
-0.037100
-0.008400
0.152540
0.069120
-0.006900
0.083330
0.015380
0.107590
0.017140
0.064040
-0.015870
-0.064520
0.042530
-0.060770
0.205880
-0.032200
0.080810
-0.051400
-0.032510
0.010200
-0.065660
-0.084320
0.224850
-0.028990
0.161190
0.077250
0.007970
0.065140
-0.130110
0.162390
-0.045050
0.000000
0.905660
-0.128710
-0.011360
-0.275860
-0.031750
-0.311480
-0.071430
0.410260
-0.181820
0.155560
0.730770
0.566670
0.517730
0.411210
-0.006620
0.126670
-0.112430
-0.373330
0.510640
-0.098590
-0.185550
-0.155880
0.090910
0.333330
0.156250
0.094590
-0.172840
0.044780
0.028570
-0.034720
0.165470
-0.024690
0.050630
0.337350
-0.135140
0.062500
0.020150
0.093830
0.095710
-0.014490
0.098740
0.046650
0.045870
-0.010530
0.079430
0.069310
0.074070
0.118970
0.010310
-0.007400
-0.063230
-0.074380
0.073210
-0.094710
-0.083080
-0.010070
0.063860
-0.102560
0.046430
0.115490
-0.147690
0.143830
-0.034920
-0.059210
0.030910
0.119450
0.036590
0.070590
0.038680
0.117020
0.057140
0.042970
0.084600
-0.112000
0.004680
-0.081080
0.120290
0.013190
0.054230
-0.006170
0.077430
0.005790
-0.068330
0.014490
0.075510
0.066410
0.146620
0.015580
0.032210
0.144730
-0.105470
0.110920
-0.051850
0.031250
0.075560
0.051890
0.015700
0.022080
0.110500
-0.064450
0.102300
0.051440
0.019890
0.179360
0.049770
-0.096260
-0.084010
-0.013940
0.121910
-0.156850
-0.039400
-0.037110
-0.025560
-0.048120
0.065930
0.155460
-0.109320
0.052310
-0.091010
-0.002110
0.019070
0.120580
0.004750
0.031540
0.095320
0.077180
0.023720
0.038860
0.116550
-0.099790
-0.008620
-0.065220
0.185740
-0.015750
0.109330
-0.030290
-0.014930
-0.007580
-0.004070
-0.020510
0.041880
0.013570
0.196520
-0.049900
0.003500
0.105030
-0.069310
0.077870
0.262630
0.408000
0.571020
0.005420
0.181650
-0.379000
-0.186270
0.469880
0.115780
-0.085400
-0.365460
-0.104430
0.310950
-0.045820
0.262710
0.017900
-0.334070
-0.231020
0.032190
-0.099790
-0.106920
0.140850
0.197280
0.010360
0.035900
-0.054650
0.089470
-0.072460
0.136460
0.073730
0.034330
0.067220
0.019530
-0.099620
-0.088510
0.014080
0.097220
-0.097050
-0.047010
-0.007410
-0.007760
-0.053030
0.032000
0.015190
-0.115380
0.060870
-0.098690
0.100920
0.000000
0.166330
-0.071940
0.062020
0.160290
-0.044300
0.086090
-0.055120
0.025970
0.120250
0.011070
-0.101120
0.037500
-0.036390
0.106920
-0.051140
0.053650
0.085710
-0.115790
-0.012140
0.018180
0.119050
0.154260
0.041290
0.280000
-0.089580
-0.134100
0.203540
-0.113030
0.116790
0.209150
-0.032430
0.137650
-0.137930
0.043660
0.005490
0.038250
0.003370
-0.057890
0.154410
0.087380
-0.035710
-0.027780
-0.050000
0.064960
-0.070920
-0.048550
-0.040320
-0.003030
-0.016950
-0.068970
0.185190
-0.026250
-0.032260
-0.041670
-0.026090
0.095710
0.163930
-0.023100
0.014490
0.050000
0.059320
0.122580
0.011490
-0.007270
-0.011490
0.052330
-0.056570
0.035290
0.005680
0.021240
0.005560
0.005520
-0.001320
-0.077350
0.119760
0.041500
0.005150
0.164100
0.065550
0.070540
0.034880
-0.050040
0.108700
-0.058820
-0.250000
-0.142860
0.090280
0.082800
-0.070590
-0.031650
-0.111110
0.992650
-0.107010
-0.070250
0.213330
0.012420
0.010900
0.040190
0.017540
0.012330
0.005450
0.025010
-0.025510
0.029420
0.005130
-0.000760
0.039340
0.000610
0.018040
-0.017350
0.019450
0.031330
-0.024090
-0.045740
0.009830
0.009500
-0.027380
0.030410
0.042830
-0.018650
0.014870
-0.037070
0.012750
0.020550
0.039620
0.026970
0.024880
0.034160
0.030840
0.040670
0.009340
0.036390
-0.011150
0.042970
0.015400
0.028090
0.016050
0.011200
0.025130
0.026720
-0.007660
-0.053390
0.032220
0.052990
0.013940
0.065730
-0.011350
0.053040
-0.000880
-0.044390
0.042460
0.011930
0.016320
0.067730
0.035650
0.066740
-0.007910
0.030880
-0.012760
0.037950
0.011970
0.014100
0.040400
0.025790
0.040090
-0.024370
0.016120
0.048920
-0.009490
-0.046020
-0.010820
-0.000270
-0.026570
0.015470
0.036790
0.004500
-0.002400
-0.040570
-0.012860
0.027710
0.027990
0.018740
0.025980
0.020500
0.048690
0.055180
0.030380
0.025990
-0.040580
0.017200
0.009780
0.033290
0.031540
0.024120
0.057330
0.061050
-0.030600
-0.078620
0.044770
0.028970
-0.019970
0.024770
-0.001420
0.061720
-0.010430
-0.047880
-0.021390
30-May-97
30-Jun-97
31-Jul-97
29-Aug-97
0.060710
0.156360
-0.011700
-0.059170
0.070490
0.051920
0.199270
-0.031400
0.207650
-0.012200
0.231480
-0.121600
-0.245100
-0.012990
0.065790
-0.006170
0.115790
0.125000
0.181340
-0.124050
0.075250
0.046820
0.220960
-0.082240
0.092380
0.084570
0.144250
0.085180
0.048530
-0.014080
0.148210
-0.043550
0.176470
-0.001640
0.057080
0.002160
-0.054950
0.093020
0.602840
0.053100
0.071250
0.044200
0.076310
-0.036450
0.085170
0.044240
0.048620
0.027020
Returns
Charles Schwab
31-Jan-84
29-Feb-84
30-Mar-84
30-Apr-84
31-May-84
29-Jun-84
31-Jul-84
31-Aug-84
28-Sep-84
31-Oct-84
30-Nov-84
31-Dec-84
31-Jan-85
28-Feb-85
29-Mar-85
30-Apr-85
31-May-85
28-Jun-85
31-Jul-85
30-Aug-85
30-Sep-85
31-Oct-85
29-Nov-85
31-Dec-85
31-Jan-86
28-Feb-86
31-Mar-86
30-Apr-86
30-May-86
30-Jun-86
31-Jul-86
29-Aug-86
30-Sep-86
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31 -Mar-88
-0.504
-0.159
-0.094
0.083
0.385
-0.181
0.153
0.031
-0.091
0.067
-0.219
-0.040
-0.125
-0.143
0.056
0.263
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
30-Dec-88
29-Jan-89
29-Feb-89
32 -Mar-88
29-Apr-89
31-May-89
30-Jun-89
29-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
30-Dec-89
29-Jan-90
29-Feb-90
33 -Mar-88
29-Apr-90
31-May-90
30-Jun-90
29-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
30-Dec-90
29-Jan-91
29-Feb-91
34 -Mar-88
29-Apr-91
31-May-91
30-Jun-91
29-Jul-91
31-Aug-91
30-Sep-91
31-Oct-91
30-Nov-91
30-Dec-91
29-Jan-92
29-Feb-92
35 -Mar-88
29-Apr-92
31-May-92
30-Jun-92
29-Jul-92
0.034
-0.098
0.055
0.034
-0.100
0.000
0.111
-0.100
0.000
0.519
-0.159
0.029
0.141
0.163
-0.064
0.503
-0.045
-0.111
-0.069
-0.038
0.110
-0.025
0.130
0.115
-0.109
0.041
-0.032
-0.105
-0.073
-0.099
0.113
-0.059
-0.042
0.410
0.141
0.110
-0.103
0.241
0.100
0.113
0.032
0.097
0.215
-0.132
0.391
0.051
0.043
0.041
-0.175
0.013
-0.186
0.050
0.031
-0.084
0.033
-0.032
-0.017
0.044
0.000
-0.016
-0.054
0.379
-0.079
-0.036
-0.019
0.245
-0.132
0.179
0.034
-0.015
-0.060
-0.052
-0.084
-0.119
0.146
-0.028
-0.019
0.178
-0.082
-0.036
-0.152
-0.088
-0.060
0.046
0.012
0.280
0.234
0.171
-0.073
0.018
-0.042
0.154
0.055
-0.067
0.058
-0.015
0.388
-0.009
0.043
0.004
-0.249
0.004
-0.023
-0.042
-0.021
0.064
-0.200
-0.300
-0.071
0.231
-0.156
0.037
-0.214
0.364
0.000
0.267
-0.105
0.176
0.200
0.000
-0.022
-0.022
-0.044
-0.070
-0.100
-0.028
-0.143
0.133
0.029
-0.029
0.118
-0.026
-0.022
-0.029
-0.059
-0.063
-0.033
0.034
0.200
0.361
0.143
0.179
0.212
0.297
0.052
0.326
-0.018
0.107
0.774
-0.036
0.231
0.167
-0.187
0.055
-0.213
0.029
31-Aug-92
30-Sep-92
31-Oct-92
30-Nov-92
30-Dec-92
29-Jan-93
29-Feb-93
36 -Mar-88
29-Apr-93
31-May-93
30-Jun-93
29-Jul-93
31-Aug-93
30-Sep-93
31-Oct-93
30-Nov-93
30-Dec-93
29-Jan-94
29-Feb-94
37 -Mar-88
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
30-Dec-94
29-Jan-95
29-Feb-95
38 -Mar-88
29-Apr-95
31-May-95
30-Jun-95
29-Jul-95
31-Aug-95
30-Sep-95
31-Oct-95
30-Nov-95
30-Dec-95
29-Jan-96
29-Feb-96
39 -Mar-88
29-Apr-96
31-May-96
30-Jun-96
29-Jul-96
31-Aug-96
30-Sep-96
31-Oct-96
30-Nov-96
-0.086
-0.200
0.128
0.228
0.050
0.160
0.070
0.127
-0.101
0.076
0.213
0.019
0.134
0.049
0.005
-0.079
0.016
-0.087
-0.068
-0.023
0.058
0.066
-0.182
0.084
0.150
-0.037
0.196
-0.099
0.094
0.150
0.109
0.090
0.064
0.022
0.254
0.053
0.011
0.244
-0.210
0.060
-0.170
0.250
0.015
0.015
-0.052
-0.010
0.010
-0.013
0.036
-0.080
0.089
0.210
-0.021
0.025
0.043
0.212
-0.025
0.091
-0.029
0.043
-0.074
0.044
0.160
0.065
0.141
0.036
-0.010
-0.043
0.096
-0.010
-0.190
-0.097
0.029
0.024
-0.056
-0.025
0.187
-0.115
-0.005
-0.034
0.146
0.088
0.143
0.014
0.144
0.157
0.174
0.051
-0.027
0.227
-0.223
0.071
-0.192
0.134
0.132
0.124
0.034
0.113
-0.041
-0.127
0.034
-0.094
-0.009
0.084
-0.209
0.045
0.087
0.328
-0.012
0.232
-0.035
0.051
-0.098
0.473
0.229
-0.015
0.299
0.176
-0.057
-0.183
-0.175
0.000
-0.035
-0.140
-0.092
-0.047
-0.123
-0.028
0.323
-0.169
0.142
-0.116
-0.140
0.184
0.198
-0.072
0.000
0.085
0.314
0.201
0.045
0.114
-0.225
0.000
0.253
-0.045
0.042
0.355
0.086
0.010
0.014
0.013
-0.001
0.013
30-Dec-96
29-Jan-97
29-Feb-97
40 -Mar-88
29-Apr-97
31-May-97
30-Jun-97
29-Jul-97
31-Aug-97
0.053
0.226
-0.039
-0.105
0.060
0.042
0.011
0.129
0.307
0.058
0.172
0.001
-0.147
0.145
0.111
-0.003
0.160
-0.089
Charles Schwab
full period
VW
EW
5yr
VW
EW
92-96
5yr
VW
EW
most recent
2yr
VW
EW
most recent
2.34
1.74
2.18
1.90
1.40
1.35
2.30
1.36
2.20
1.43
3.18
2.17
2.24
1.49
1.79
1.88
3.22
2.84
2.04
1.09
1.13
1.89
0.63
0.94
We must remember that betas obtained from stocks correspond to EQUITY betas and thus include financial risk from leverage
We use leverage and the Hamada equation to unlever the betas
Leverage
d/v
d/e
Unlevered
Betas
Assuming
35% tax rate
0.080
0.087
Charles Schwab
full period
VW
EW
5yr
VW
EW
0.000
0.000
0.380
0.613
2.21
1.65
2.18
1.90
1.00
0.96
2.17
1.29
2.20
1.43
2.27
1.55
92-96
5yr
VW
EW
most recent
2yr
VW
EW
most recent
2.12
1.41
1.79
1.88
2.30
2.03
1.93
1.03
1.13
1.89
0.45
0.67
Using the CAPM model to get the cost of capital for the project
Risk free rate
Reasonable approach is to use the current yield on long term government bonds
If we assume that the project will last for 10 years, we use 10 yr yield
Market risk premium
One possible approach to estimate the market risk premium:
Historical average annual return of large stocks minus that of long term US government bonds over the longer p
estimate = 12.7-5.5
From exhibit 3
0.072
Using this definition of Market premium
the estimated cost for the project would be
or
or
k = 0.0634 + 0.05*2.2
k = 0.0634 + 0.05* 2.07
Cost of capital for the project would oscilate around 17%
Conclusion
If Ameritrade uses debt to finance the project, the cost of capital may fall but the equity beta (and the cost of equ
VWI
EWI
-0.012910
-0.039170
0.013450
0.002730
-0.052350
0.023590
-0.020350
0.112570
0.000390
0.000130
-0.010620
0.023790
0.085730
0.017000
-0.001930
-0.002180
0.055870
0.017190
-0.000540
-0.004800
-0.039650
0.044570
0.069270
0.043060
0.009860
0.072840
0.053880
-0.008060
0.050810
0.014300
-0.059690
0.066390
-0.079140
0.049440
0.015170
-0.026540
0.128370
0.047630
0.023240
-0.017130
0.005220
0.043830
0.044050
0.037230
-0.020740
-0.225
-0.073
0.070
0.045
0.052
-0.017
0.005760
-0.053810
0.007100
-0.019420
-0.050770
0.013800
-0.047450
0.089620
0.000270
-0.020890
-0.031410
0.005050
0.122760
0.047140
-0.008530
-0.011290
0.022930
0.003470
0.019510
-0.003410
-0.056140
0.018960
0.053270
0.029130
0.043400
0.062360
0.047720
0.015840
0.036630
0.008960
-0.073610
0.022110
-0.060490
0.024620
-0.006280
-0.034530
0.116820
0.074950
0.033090
-0.019610
0.000710
0.022010
0.034700
0.015590
-0.015510
-0.271
-0.052
0.028
0.078
0.062
0.034
0.011
0.001
0.051
-0.007
-0.028
0.037
0.018
-0.016
0.021
0.066
-0.016
0.022
0.049
0.040
-0.005
0.078
0.022
-0.002
-0.029
0.018
0.018
-0.070
0.015
0.024
-0.028
0.089
-0.004
-0.009
-0.092
-0.054
-0.012
0.066
0.030
0.049
0.076
0.029
0.003
0.041
-0.044
0.047
0.027
-0.011
0.018
-0.037
0.107
-0.002
0.013
-0.024
0.014
0.007
-0.019
0.040
0.015
-0.017
0.048
0.001
-0.024
0.019
-0.012
-0.037
0.020
0.063
0.003
0.017
0.031
0.027
-0.008
0.032
0.019
0.004
-0.051
-0.008
-0.012
-0.046
0.016
0.022
-0.027
0.047
0.005
-0.027
-0.110
-0.080
-0.056
0.037
-0.004
0.085
0.134
0.078
0.031
0.030
-0.035
0.035
0.029
0.009
0.024
-0.025
0.036
0.149
0.052
-0.014
-0.033
0.006
-0.040
0.027
-0.021
0.012
0.011
0.040
0.018
0.012
0.005
0.025
-0.026
0.029
0.005
-0.001
0.039
0.001
0.018
-0.017
0.019
0.031
-0.024
-0.046
0.010
0.010
-0.027
0.030
0.043
-0.019
0.015
-0.037
0.013
0.021
0.040
0.027
0.025
0.034
0.031
0.041
0.009
0.036
-0.011
0.043
0.015
0.028
0.016
0.011
0.025
0.027
-0.008
-0.053
0.032
0.053
0.014
0.066
-0.024
0.012
0.016
0.068
0.036
0.067
-0.008
0.031
-0.013
0.038
0.012
0.014
0.040
0.026
0.040
-0.024
0.016
0.049
-0.009
-0.046
-0.011
0.000
-0.027
0.015
0.037
0.005
-0.002
-0.041
-0.013
0.028
0.028
0.019
0.026
0.021
0.049
0.055
0.030
0.026
-0.041
0.017
0.010
0.033
0.032
0.024
0.057
0.061
-0.031
-0.079
0.045
0.029
-0.020
0.025
-0.011
0.053
-0.001
-0.044
0.042
0.071
0.044
0.076
-0.036
-0.001
0.062
-0.010
-0.048
-0.021
0.085
0.044
0.049
0.027
from Exhibit 4
Avg
1.80
1.50
2.22
1.42
2.07
1.77
1.17
1.20
0.0634
From exhibit 3
f Market premium
f Market premium
all but the equity beta (and the cost of equity) will increase with the level of leverage used.