Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Create a hypothetical portfolio invested equally in five stocks from the following industries: Consumer Staples, Technology, Financial, Energy, and Retail (You may select any

1. Create a hypothetical portfolio invested equally in five stocks from the following industries: Consumer Staples, Technology, Financial, Energy, and Retail (You may select any companies that you wish from each industry. However, it does make the assignment more interesting if you select at least one company that has underperformed in general). We will refer to this as the equally weighted portfolio. (Walmart, Samsung, Bank of America, Apache Corporation and Kohl's)

2. Calculate the investment returns for each stock in your portfolio, the S&P 500 index, and the equally weighted portfolio for 2017 YTD, 2016, & the past 3yrs. What observations can you make about the performance of your equally weighted portfolio (Hint: Some points you may choose to consider include; market correlation, stock specific volatility, overall factors affecting the industry such as commodity prices, etc.)?

3. Calculate the beta for each of your stocks and compare your results with the figures found in Yahoo Finance. Calculate the intrinsic value for each company using the Dividend discount model (You can use a 4.6% risk premium & 2.4% risk free rate for simplicity). Compare the current stock price to the intrinsic value and discuss the rationale for any noticeable differences. Discuss and compare the stock performance for each company, the S&P 500, and the equally weighted portfolio over the last 18 months (Hint: Select dividend paying stocks for your portfolio)

4. How risky is your portfolio compared to the overall stock market? Do the historical returns justify the risks? (Hint: You will want to use a specific measure such as beta, standard deviation, etc. to accurately assess the risk in your portfolio)

5. Create a correlation matrix using the stocks in your portfolio and the S&P 500. What observations can you make regarding risk to the individual stocks in the portfolio, given the current and future economic environment (Hint: You should be making connections using relevant economic variables and indicators)?

Step by Step Solution

3.40 Rating (166 Votes )

There are 3 Steps involved in it

Step: 1

1 Hypothetical portfolio invested equally in five stocks from the following industries Consumer Staples Technology Financial Energy and Retail Equally weighted portfolio Portfolio 1 Ticker Name Indust... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Document Format ( 2 attachments)

PDF file Icon
60975e8e62c98_27782.pdf

180 KBs PDF File

Word file Icon
60975e8e62c98_27782.docx

120 KBs Word File

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistics For Business And Economics

Authors: Paul Newbold, William Carlson, Betty Thorne

8th Edition

0132745658, 978-0132745659

More Books

Students also viewed these Corporate Finance questions

Question

What is your greatest strength?

Answered: 1 week ago

Question

Solve each equation or inequality. |6x8-4 = 0

Answered: 1 week ago