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Case: Dr . Shelly's Portfolio Dr . Ashley Shelly completed Family Medicine training at the University of South Alabama Family Medicine Residency, where she served
Case: Dr Shelly's Portfolio
Dr Ashley Shelly completed Family Medicine training at the University of South Alabama Family
Medicine Residency, where she served as chief resident during her last year. She enjoyed working
in Alabama, so as she neared the end of the residency requirement, she accepted a position as a
Family Medicine Doctor in Mobile, Alabama. Her new salary would be nearly six times more than
the internship salary. Her hard work had finally paid off. She knew it was time to put together a
financial plan which would focus on saving for a home purchase, while tackling her huge $
debt in student loans.
She remembered from an undergraduate finance class, that it was a good strategy to invest in a
solid company that was currently experiencing lower than expected stock prices in the hopes that
the would turn things around. She decided that Ford Motor Company may be a great investment
choice since its recent electric vehicle EV initiatives would be supported by President Biden's
policy in which he set a target of of EV sale shares in the US by She also learned that it wasn't good to place all your eggs in one basket, so combining shares of
Ford with other stocks or even with a welldiversified Standard & Poor index fund might be worth
considering. She would analyze portfolios formed by combining Ford shares with Dorman
Products DORM Cooper Standard CPS and the SPDR S&P ETF SPY in separate
portfolios. CPS and DORM compete in the auto industry with Ford.
Ford F founded in is globally headquartered in Michigan. It is an auto maker with three
customercentered business segments that focus on: gaspowered & hybrid vehicles, electric
vehicles EV and commercial vehicles & services. Additionally, the company offers financial
services and is pursuing a nonautomotive mobility tech solution through its Ford Next business.
The auto industry is experiencing high demand and supplychain constraints, which has affected
Ford's ability to offer some features in its new vehicles. Despite the challenges, Ford's strength in
innovation has made it America's second largest EV maker behind Tesla.Dorman Products DORM founded in is globally headquartered in Pennsylvania. It is an
aftermarket auto parts maker that provides replacement parts and replacement upgrades. They
provide tens of thousands of products for different makes and models, covering parts and
electronics. Their strategy is innovation, new product development, and acquiring brands. Strong
macro fundamentals in the automotive aftermarket are expected to remain robust due to an
increasing average vehicle mileage and average vehicle age, as well as a continued shortage of
new vehicles.
Cooper Standard CPS founded in is globally headquartered in Michigan. It makes and
sells sealing and fluid handling systems and components used in equipment, machinery and
automotive. Its serves diverse transportation and industrial markets. The company leverages its
engineering and manufacturing capabilities to win new business and capitalize on positive trends
associated with electric vehicles that constitutes over of future annualized sales from new
business awards received in the second quarter of e Portfolio : SPY
Calculate expected returns for F SPY DORM, and CPS Calculate expected returns for
Portfolios
Calculate standard deviation for F SPY DORM, and CPS Calculate expected returns for
Portfolios
Calculate required rate of return for F SPY DORM, and CPS using CAPM. Calculate
expected returns for Portfolios using CAPM.
Calculate Sharpe's Ratio for F SPY DORM, and CPS using CAPM. Calculate expected
returns for Portfolios using CAPM.
Calculate the Correlation Coefficient between and Dorm.
Calculate the Correlation Coefficient between and CPS
Calculate the Correlation Coefficient between F and SPY
Calculate the Correlation Coefficient between Dorm and SPY
Calculate the Correlation Coefficient between CPS and SPYQuestions
What is the difference between beta and standard deviation?
Were there any instances where Stock As beta was higher than Stock Bs beta, but Stock
had a higher standard deviation than stock A If so list the occurrences and explain what
makes this situation is possible.
How are acceptreject decisions made in investments when comparing the expected rate of
returns to the required rate of returns?
Based strictly on the analysis explained in part which stocks, ETF, or portfolios would
be considered desirable investments? Which investments would be considered
undesirable?How does Sharpe's Ratio contribute to the analysis of portfolio performance?
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