CGI Group, Inc - Essay Example

As the essa declares GIB is headed by its founder Serge Godin, who has been serving as both the Chief Executive Officer and Chairman of the Board since 1976. As per GIB’s latest annual report, Mr Godin’s annual salary and bonuses amounted to $810,000. This paper stresses that given that Yahoo! Finance or Reuters does not have a GIB beta estimate, estimate of MSN Money is used. GIB’s beta is currently set at 1.64. This shows the measure of the sensitivity of a stock, bond, or fund to swings of an index or the overall market.

In this case, GIB’s stocks are compared with the S&P 500 index and its bonds and bond funds are compared with the Lehman Brothers Aggregate Bond index. Given the GIB’s estimated beta is higher than 1.0 indicates its relatively higher volatility compared to the overall market. As such, it is forecasted that if the S&P 500 moves 10% higher, the GIB stock with a beta of 1.64 should move by 16.4%. As compared to other notable players in the same sector, GIB is less volatile than E-Bay or Amazon.

com, which has betas of 2.06 and 2.65, respectively. GIB’s beta of 1.64 is already its leverage beta. This is because the beta derived by MSN Money takes into consideration both the stocks or equity of the company as well as the bond and bond funds which are the company’s borrowings. GIB’s debt component is comprised of unsecured revolving term facility bearing an interest equal to the US LIBOR rate plus banker’s acceptance rate of 1.25% plus 1.25%, and senior US unsecured notes bearing an average interest rate of 4.

97% and maturing on 2014.