Exhibit3 contain the beta, leverage, and other related information for Marriott and comparable companies in the lodging and restaurant businesses
To select the appropriate risk premium to use in the hurdle rate calcultions,Mr.Cohrs examined a variety of data on the stock and bond markets. Exhibits 4 provides historical information on the holding-period returns on government and corporate bond and the S&P 500 Composite index of common stocks.Holding- period return were the returns realized by the security holder, including any cash payment received by the holder plus any capital gain or loss on the security.As examples,the 5.23% holding- period return for the S&P500 Composite index of common stocks in 1987 was the sum of the dividend yield of 3.20% and the capital gain of 2.03%.The-2.69% holding-period return for the index of long-term U.S. government bonds in 1987 was the sum of the coupon yield of 7.96% and a capital gain of - 10.65%
Exhibit 5 provide ststistics on the spread between the S&P 500 Composite returns and the holding-period return on treasury bills,U.S. government bonds, and highgrade,long-trem corporate bonds.
Mr.Cohrs was concerned about the correct time interval to measure these averages,especially given the high returns and volatility of the bond markets shown in exhibits 4 and 5