Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that you recently graduated with an MBA degree and have just landed a job as a financial planner with Henry's Investment Inc. Your first

image text in transcribed
Assume that you recently graduated with an MBA degree and have just landed a job as a financial planner with Henry's Investment Inc. Your first assignment is to create a portfolio for a client by selecting two stocks on the market. 1. You need to complete the below table by selecting ANY two stocks (except for Microsoft) on Nasdaq and collect the data on Dec 31 each year for the last trading day in that year): Company 1's Name Dividend Stock Price (paid in the last quarter as of the year) Company 2's Name Dividend Stock Price (paid in the last quarter as of the year) Nasdaq Composite Includes Dividends Year 2019 2018 2017 2016 2015 2014 2. Use the data you have collected to calculate annual returns for Company 1, Company 2, and the Market Index, and then calculate average returns over the five-year period. Give comments on your calculation results. Which stock has a higher return? 3. Calculate the standard deviation of the returns for Company 1, Company 2, and the Market Index. Do you think the standard deviation can reflect the stocks' risks? And why? 4. Construct a scatter diagram graph that shows Company 1's and Company 2's returns on the vertical axis and the Market Index's returns on the horizontal axis. What's the relationship between the two stocks from your observation? 5. Estimate or use data to find Company 1's and Company 2's betas, as the slopes of regression lines with stock returns on the vertical axis (y-axis) and market return on the horizontal axis (x- axis). Are these betas consistent with your graph? Do you think beta can reflect the stocks risks? And why

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

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

Smart Bitcoin Investor What Are The Advantages Of Bitcoins

Authors: Mohamed Mendieta

1st Edition

979-8353162049

More Books

Students also viewed these Finance questions