Calculate the data highlighted in green, based on $3$ portfolios containing your companies using $3$ different weightings. Equal weighting

$($assumes the investor invests an equal$\%$ of her assets in each stock$)$

Market value weighting

$($assumes the investor's allocation to each stock is that stock's market capitalization as a $\%$ of the entire portfolio's market capitalization$)$

Company Net Sales weighting

$($assumes the investor's allocation to each stock is that stock's Net Sales as a $\%$ of the Net Sales of all stocks in the portfolio combined

There are $5$ items to calculate for each of the $3$ portfolios. You'll get $1/3$ mark for each correct answer. Maximum marks $=5$ NOTE: For each portfolio's Treynor Ratio calculation use the $1$ yr $\%$ Price Change as the portfolio return.

In the Q$6$ tab, write a paragraph on which of the three portfolios you'd prefer to invest in and why $6$

Refer to the data to justify your answer. $4$ Marks

Choose any one of the stocks in your portfolio

Go to the "Charting" tab in Factset and create a chart with the past $10$ years of data showing these $3$ things:

The price of the stock.

The stock's last $12$ month's earnings per share $($EPS$-$LTM$)$

The stock's price to earnings ratio based on the last $12$ months of eps $($P$/$E $-$ LTM$)$

Take a screenshot of the chart and paste it in tab $"$Q$7"2$ marks

A stock's price will change due to either a change in the company's EPS and$/$or a change in the multiple of EPS $($the P$/$E ratio$)$ that investors are willing to pay. Point out a time period in the above graph when the stock price changed due to an increase or decrease in the P$/$E ratio $($while the eps was fairly stable$)$ rather than to a change in the earnings per share $($while the P$/$E ratio remained fairly stable$)8$

$2$ marks

Which company in your portfolio is most likely to appeal to a "Value" investor and why?

Which company in your portfolio is most likely to appeal to a "Momentum" investor and why?

$2$ marks

When creating a portfolio of securities you have to decide what $\%$ of your money to invest in each company. The simplest approach is to put an equal$\%$ into each. So if you have $10$ companies, you put $10\%$ of your money in each stock.

Another approach is to allocate according to the size of the company $($ie market capitalization$).$ This way, you put a higher $\%$ of your money into the bigger companies and a lower $\%$ into the smaller companies. To figure out what $\%$ to put into a company you just divide that company's market capitalization by the total of the market capitalization of all companies in the portfolio combined. So suppose when you add up the market cap of all $12$ of your companies it comes to $$100$ billion. If the first company has a market cap of $$16$ billion then you'd allocate $16\%$ of your money to that company $($$$16$ billion $/$ $$100$ billion$).$

Another approach is to weight your allocations by company sales. The $\%$ you'd allocate to a given company would be: that company's sales$/$ the total sales of all companies in the portfolio.

Once you've calculated the $\%$ allocation of a given stock within the portfolio you use that same $\%$ weight to calculate the portfolio's return $(1$ yr$\%$ price change$),$ Beta, P$/$E ratio & dividend yield.

So suppose you had this $2$ stock portfolio:

$\%$ allocation P$/$E ratio

Co A $60\%18$

Co B $40\%15$

To get the P$/$E ratio for the whole portfolio you just multiply each stock's P$/$E by it's $\%$ allocation then add up all the results. $(40\%$ x $15)=16\mathrm{.}8$

The same process applies for calculating the portfolio Beta, dividend yield and $1$ Yr Price change.

EQUAL WEIGHTEDCAP WEIGHTEDSALES WEIGHTEDCalculate and input the following portfolio data:$\%$ Change inPriceP$/$E Ratio $-$ TTM Div Yield$3$y BETARisk Free Rate$1\mathrm{.}25$Treynor Ratio