finance Finance 3340

Project 1

Assume that you have $1,000,000. You will use this to form a hypothetical large-cap

(each with at least $10 Billion in Market Capitalization) diversified stock portfolio by

investing it in five stocks chosen from five different industries. Be sure to pick

companies that pay dividends. No short sales, fractional shares, or margin trades are

permitted. To determine how much you have invested in any particular stock, multiply

the stock price by the number of shares you buy. You must use at least $900,000. Any

funds left over will be held as cash, earning no interest. Dividends and other cash

distributions will be added to cash, not reinvested.

Trades are not permitted except in extraordinary situations, with my specific approval

beforehand. Trading will only be considered between Friday of Week 1 to Thursday of

Week 13, January 10 to April 9. Should I allow a trade, you need to notify me about the

exact trade you make within 24 hours by e-mail.

Deliverables:

1. Spreadsheet that includes the number of shares you purchased for each

stock and the closing prices as of the end of Week 2, January 31, of your

stocks. Report the last dividend paid date and amount as well as the

expected next ex-dividend and paid dates. Also, include your total investment

and the amount held in cash. To get stock price information, go to

www.google.com or www.yahoo.com and click on “Finance.” Enter the ticker

symbol of your stock and click on historical prices. Use the column that

contains closing prices.

2. Conduct an analysis of the stocks, telling me why you chose these particular

stocks based on your analysis. The analysis (3 to 6 pages plus spreadsheets)

should include the following:

3. a) Give a brief history of the companies and their products. Briefly discuss

where the company is heading (new products, ventures). Identify who each

company’s competitors are and what each company’s ranking is amongst its

competitors.

4. b) Find the reported beta and the adjusted beta of the companies. Report

your source and describe how they calculated the betas including frequency

of observations, as methods vary. Explain what the beta tells you about each

company.

Project Part 2. Valuation of your portfolio and companies (and reevaluation based on any

changes you have made in your portfolio). 

Deliverable:

1. Calculate historical beta and adjusted beta for each stock in your portfolio and

the portfolio as a whole, based on the data for 5 years, 3 years and 1 year

prior to January 31, 2021.

2. Using the stocks in your initial portfolio, prepare a valuation of each stock and

the initial portfolio using zero, constant or variable growth models with a

market return at 8% and at 12%. [Note that the growth rate must be less than

the required rate of return.] Make sure you list the date of the valuation and

the closing share price of your firm’s stock. Each firm’s required rate of return

will depend on its beta.

3. Is the stock of each of these companies over or undervalued?

4. What is the expected return using the CAPM model?

5. Map risk-returns relationships for 1 year and 3 year returns to each stock and

your portfolio, relative to the benchmark (S&P 500) returns.

Finance 3340

Project 1

Assume that you have $1,000,000. You will use this to form a hypothetical large-cap (each with at least $10 Billion in Market Capitalization) diversified stock portfolio by investing it in five stocks chosen from five different industries. Be sure to pick companies that pay dividends. No short sales, fractional shares, or margin trades are permitted. To determine how much you have invested in any particular stock, multiply the stock price by the number of shares you buy. You must use at least $900,000. Any funds left over will be held as cash, earning no interest. Dividends and other cash distributions will be added to cash, not reinvested.

Trades are not permitted except in extraordinary situations, with my specific approval beforehand. Trading will only be considered between Friday of Week 1 to Thursday of Week 13, January 10 to April 9. Should I allow a trade, you need to notify me about the exact trade you make within 24 hours by e-mail.

Deliverables:

1. Spreadsheet that includes the number of shares you purchased for each stock and the closing prices as of the end of Week 2, January 31, of your stocks. Report the last dividend paid date and amount as well as the expected next ex-dividend and paid dates. Also, include your total investment and the amount held in cash. To get stock price information, go to www.google.com or www.yahoo.com and click on “Finance.” Enter the ticker symbol of your stock and click on historical prices. Use the column that contains closing prices.

2. Conduct an analysis of the stocks, telling me why you chose these particular stocks based on your analysis. The analysis (3 to 6 pages plus spreadsheets) should include the following:

3. a) Give a brief history of the companies and their products. Briefly discuss where the company is heading (new products, ventures). Identify who each company’s competitors are and what each company’s ranking is amongst its competitors.

4. b) Find the reported beta and the adjusted beta of the companies. Report your source and describe how they calculated the betas including frequency of observations, as methods vary. Explain what the beta tells you about each company.

Project: Part 1

Above Standards
Incorporates many scholarly resources effectively that reflect depth and breadth of research.

1.45 pts

Meets Standards
Incorporates some scholarly resources effectively that reflect depth and breadth of research.

1.3 pts

Approaching Standards
Incorporates very few scholarly resources that reflect depth of research.

1.1 pts

Below Standards
Does not incorporate scholarly resources that reflect depth and breadth of research.

1.75 pts

Above Standards
Demonstrates extensive exploration of issues / objects / works through the collection and analysis of evidence to make well-informed conclusions / judgments. Organizes and synthesizes evidence to reveal insightful patterns, differences, or similarities related to focus.

0.85 pts

Meets Standards
Demonstrates adequate exploration of issues / objects / works through the collection and analysis of evidence to make informed conclusions / judgments. Organizes evidence to reveal important patterns, differences, or similarities related to focus.

0.75 pts

Approaching Standards
Demonstrates minimal exploration of issues / objects / works through the collection and analysis of evidence to make informed conclusions / judgments. Organizes evidence, but the organization is not effective in revealing important patterns, differences, or similarities.

0.59 pts

Below Standards
Does not demonstrate even minimal exploration of issues / objects / works through the collection and analysis of evidence and unable to make informed conclusions / judgments. Lists evidence, but it is not organized and/or is unrelated to focus.

0.88 pts

Above Standards
Effectively works with numerical data and solves quantitative problems from a wide array of authentic contexts in everyday life.

0.84 pts

Meets Standards
Works with numerical data and solves quantitative problems from a wide array of authentic contexts with moderate effectiveness.

0.74 pts

Approaching Standards
Works with numerical data and solves quantitative problems with minimal effectiveness.

0.58 pts

Below Standards
Is not able to work with numerical data and solve quantitative problems.

0.87 pts

Project: Part 1
	Criteria		Ratings		Pts
This criterion is linked to a Learning OutcomeResearch		1.75 pts
	This criterion is linked to a Learning OutcomeInquiry and Analysis		0.88 pts
	This criterion is linked to a Learning OutcomeQuantitative Literacy		0.87 pts
Total Points: 3.5

Project Part 2. Valuation of your portfolio and companies (and reevaluation based on any changes you have made in your portfolio). 

Deliverable:

1. Calculate historical beta and adjusted beta for each stock in your portfolio and the portfolio as a whole, based on the data for 5 years, 3 years and 1 year prior to January 31, 2021.

2. Using the stocks in your initial portfolio, prepare a valuation of each stock and the initial portfolio using zero, constant or variable growth models with a market return at 8% and at 12%. [Note that the growth rate must be less than the required rate of return.] Make sure you list the date of the valuation and the closing share price of your firm’s stock. Each firm’s required rate of return will depend on its beta.

3. Is the stock of each of these companies over or undervalued?

4. What is the expected return using the CAPM model?

5. Map risk-returns relationships for 1 year and 3 year returns to each stock and your portfolio, relative to the benchmark (S&P 500) returns.

Rubric

Project: Part 2

Criteria

Ratings

Pts

This criterion is linked to a Learning OutcomeQuantitative Literacy

Above Standards
Effectively works with numerical data and solves quantitative problems from a wide array of authentic contexts in everyday life.

3.94 pts

Meets Standards
Works with numerical data and solves quantitative problems from a wide array of authentic contexts with moderate effectiveness.

3.5 pts

Approaching Standards
Works with numerical data and solves quantitative problems with minimal effectiveness.

2.82 pts

Below Standards
Is not able to work with numerical data and solve quantitative problems.

4.35 pts

This criterion is linked to a Learning OutcomeInquiry and Analysis

Above Standards
Demonstrates extensive exploration of issues / objects / works through the collection and analysis of evidence to make well-informed conclusions / judgments. Organizes and synthesizes evidence to reveal insightful patterns, differences, or similarities related to focus.

1.95 pts

Meets Standards
Demonstrates adequate exploration of issues / objects / works through the collection and analysis of evidence to make informed conclusions / judgments. Organizes evidence to reveal important patterns, differences, or similarities related to focus.

1.75 pts

Approaching Standards
Demonstrates minimal exploration of issues / objects / works through the collection and analysis of evidence to make informed conclusions / judgments. Organizes evidence, but the organization is not effective in revealing important patterns, differences, or similarities.

1.43 pts

Below Standards
Does not demonstrate even minimal exploration of issues / objects / works through the collection and analysis of evidence and unable to make informed conclusions / judgments. Lists evidence, but it is not organized and/or is unrelated to focus.

2.2 pts

Project: Part 2
	4.35 pts
	2.2 pts
This criterion is linked to a Learning OutcomeCritical Thinking	2.2 pts Above Standards Demonstrates comprehensive exploration of issues and ideas before accepting or forming an opinion or conclusion. 1.95 pts Meets Standards Demonstrates moderate exploration of issues and ideas before accepting or forming an opinion or conclusion. 1.75 pts Approaching Standards Demonstrates minimal exploration of issues and ideas before accepting or forming an opinion or conclusion. 1.43 pts Below Standards Does not demonstrate exploration of issues and ideas before accepting or forming an opinion or conclusion.