CCTFG 442 Investment Project

Overview: Each of you will involve in a stock group for 10 weeks during this semester. You will invest $100,000 in a stock group and are required to track that investment. You will make some critical decisions on what to do with that money. This project will hopefully challenge each of you to think about your options and how this simulation played out for the 10 weeks.

Grading Criteria: Please be sure to dedicate sufficient time to this project as late projects are not accepted. Early submissions are always welcomed and encouraged. Any written responses should be in complete sentences and be free of spelling or grammatical errors. Spelling, grammar, and formatting errors reduce the grade by one point each.

Required: Project should be completed in Microsoft Excel (set up stock names & symbols as rows and closing prices as columns) which is available in Canvas to download. The completed Excel files should be uploaded as an attachment in Canvas before the end of due date. Presentations of Excel reports should be in the below order.

Chapter 1 Investment Assignment (Project) (Part 1) (textbook 12th edition p.16)

You have $100,000 to invest in ten stocks, $10,000 in each (no mutual funds). You may not alter your selections during the semester, and cash is not an option. (Sorry; the purpose of this assignment is not to teach trading. Additional material will be added as the semester progresses.) Select an Internet source and set up a watch account. Possible websites with information on companies include the following:

Possible websites with information on companies

www.bloomberg.com https://www.bloomberg.com/

money.cnn.com https://money.cnn.com/

www.forbes.com https://www.forbes.com/

www.googl.com/finance https://www.google.com/finance

www.marketwatch.com https://www.marketwatch.com/

www.morningstar.com https://www.morningstar.com/

money.msn.com https://www.msn.com/en-us/money

www.reuters.com https://www.reuters.com/

finance.yahoo.com https://finance.yahoo.com/

**The watch account will help you follow the stocks over time and keep track of your gains or losses.

Chapter 5 Investment Assignment (Project) (Part 2) (textbook 12th edition p.181-182)

This part adds to what you have already done.

1. Obtain the beta coefficient for each stock and calculate the beta for your portfolio.
2. What does your portfolios beta coefficient tell you about the tendency of the portfolio to move with the market?
3. Find the beta coefficients from another source for each stock. Does the ranking from least risky to most risky for the ten stocks differ? Are the two portfolio beta coefficients different? What does any difference in the portfolio betas imply about the accuracy of the measures of systematic risk associated with your portfolio?
4. How has each stock performed sine the assignment began? What is the portfolio currently worth? What is the percentage change in the portfolio?
5. How did an index of the market such as the Standard & Poors 500 stock index perform? Did your portfolio follow the market?
6. Compare the percentage change to the value of your portfolio with the percentage change in the market. Was your portfolios performance better or worse after considering the change in the market and the portfolios Beta?
7. If an investor desired to construct a well-diversified portfolio with moderate market risk, do the stocks you have selected achieve that objective?

Chapter 8 Investment Assignment (Project) (Part 3) (textbook 12th edition p.322)

In Part 1 you invested $10,000 in each of ten stocks and set up a watch account at a site such as Yahoo? Finance. Some of the sites from part 1 provide the ratios illustrated in chapter 8. This assignment asks you to determine if any of the stocks you selected meet any of the following ratio requirements:

Current ratio at least 1:1

Profit margin minimum of 8%

Return on assets minimum of 10%

Return on equity minimum of 15%

Long-term debt to total assets not to exceed 40%

(Most sources use long-term debt and not total liabilities. If you wish to use total liabilities to compute the debt ratio, you may find that information on the firms balance sheet.)

Although these ratios do not indicate whether the stock is over- or undervalued (that is addressed in chapter 9), they can be a good place to start. For example, if the return on assets and the return on equity are negative, you might want to ask if you desire to own a stock that is operating at a loss.

Chapter 9 Investment Assignment (Project) (Part 4) (textbook 12th edition p.354)

Part 3 requested that you obtain ratios such as the return on equity and the profit margin. A high profit margin and a high return on equity are desirable, but those data are derived from the firms balance sheet and do not consider the actual price that you have to pay for the stock. The following ratios add the stocks price to help determine whether you should buy or sell the stock.

1. Fill in the following table for each of your companies.

Stock P/E P/B P/S PEG

2. Rank the stocks from best to worst (e.g., lowest P/E to highest P/E, lowest P/B to highest P/B).

Stock P/E P/B P/S PEG

3. Are the rankings consistent? Based on the valuation ratios, which stocks appear to be the best and the worst? Are you having trouble drawing a conclusion?
4. Add the beta coefficients to the initial table.

Stock P/E P/B P/S PEG beta

5. The next table concerns dividends and earnings.

Stock Dividend Dividend yield Estimated growth rate Historical growth rate

You may have trouble finding growth rates, especially if the firm is operating at a loss. High dividend yields and high growth rates increase the stocks attractiveness.

6. Based on the information that you derived, would you sell any of the ten stocks that you selected?

******************************************************************************************************************

Chapter 8: formulas

Liquidity Ratios: Current ratio: measures a company's ability to pay short-term and long-term obligations

• Current assets / current liabilities

Profitability Ratios %: Gross profit margin: assess a company's financial health and business model by revealing the proportion of money left over from revenues after accounting for the cost of goods sold

• (sales - cost of goods sold) / sales

Return on Assets: an indicator of how profitable a company is relative to its total assets

• Earnings after taxes / total assets

Return on Equity: the amount of net income returned as a % of shareholders equity

• Earnings after taxes / equity

Leverage (Capitalization) Ratios %:

Debt ratio: the proportion of a company's assets that are financed by debt

• Debt / total assets

Chapter 9: formulas

Price-earnings (P/E) ratio = Market Value per Share / Earnings per Share

Price per share book value = Market price per Share/Book value of the latest quarter per Share

Book Value per Share = (Total Assets - Total Liabilities) / # of shares outstanding

Sales per share = (total Revenue/Sales) / Average shares outstanding

PEG ratio = P/E ratio / Earnings growth rate

Adjusted PEG ratio = P/E ratio / Growth rate + Dividend yield

Overview: Each of you will involve in a stock group for 10 weeks during this semester. You will invest $100,000 in a stock group and are required to track that investment. You will make some critical decisions on what to do with that money. This project will hopefully challenge each of you to think about your options and how this simulation played out for the 10 weeks.

Grading Criteria: Please be sure to dedicate sufficient time to this project as late projects are not accepted. Early submissions are always welcomed and encouraged. Any written responses should be in complete sentences and be free of spelling or grammatical errors. Spelling, grammar, and formatting errors reduce the grade by one point each.

Required: Project should be completed in Microsoft Excel (set up stock names & symbols as rows and closing prices as columns) which is available in Canvas to download. The completed Excel files should be uploaded as an attachment in Canvas before the end of due date. Presentations of Excel reports should be in the below order.

Chapter 1 Investment Assignment (Project) (Part 1) (textbook 12th edition p.16)

You have $100,000 to invest in ten stocks, $10,000 in each (no mutual funds). You may not alter your selections during the semester, and cash is not an option. (Sorry; the purpose of this assignment is not to teach trading. Additional material will be added as the semester progresses.) Select an Internet source and set up a watch account. Possible websites with information on companies include the following:

Possible websites with information on companies

www.bloomberg.com https://www.bloomberg.com/

money.cnn.com https://money.cnn.com/

www.forbes.com https://www.forbes.com/

www.googl.com/finance https://www.google.com/finance

www.marketwatch.com https://www.marketwatch.com/

www.morningstar.com https://www.morningstar.com/

money.msn.com https://www.msn.com/en-us/money

www.reuters.com https://www.reuters.com/

finance.yahoo.com https://finance.yahoo.com/

**The watch account will help you follow the stocks over time and keep track of your gains or losses.

Chapter 5 Investment Assignment (Project) (Part 2) (textbook 12th edition p.181-182)

This part adds to what you have already done.

1. Obtain the beta coefficient for each stock and calculate the beta for your portfolio.
2. What does your portfolios beta coefficient tell you about the tendency of the portfolio to move with the market?
3. Find the beta coefficients from another source for each stock. Does the ranking from least risky to most risky for the ten stocks differ? Are the two portfolio beta coefficients different? What does any difference in the portfolio betas imply about the accuracy of the measures of systematic risk associated with your portfolio?
4. How has each stock performed sine the assignment began? What is the portfolio currently worth? What is the percentage change in the portfolio?
5. How did an index of the market such as the Standard & Poors 500 stock index perform? Did your portfolio follow the market?
6. Compare the percentage change to the value of your portfolio with the percentage change in the market. Was your portfolios performance better or worse after considering the change in the market and the portfolios Beta?
7. If an investor desired to construct a well-diversified portfolio with moderate market risk, do the stocks you have selected achieve that objective?

Chapter 8 Investment Assignment (Project) (Part 3) (textbook 12th edition p.322)

In Part 1 you invested $10,000 in each of ten stocks and set up a watch account at a site such as Yahoo? Finance. Some of the sites from part 1 provide the ratios illustrated in chapter 8. This assignment asks you to determine if any of the stocks you selected meet any of the following ratio requirements:

Current ratio at least 1:1

Profit margin minimum of 8%

Return on assets minimum of 10%

Return on equity minimum of 15%

Long-term debt to total assets not to exceed 40%

(Most sources use long-term debt and not total liabilities. If you wish to use total liabilities to compute the debt ratio, you may find that information on the firms balance sheet.)

Although these ratios do not indicate whether the stock is over- or undervalued (that is addressed in chapter 9), they can be a good place to start. For example, if the return on assets and the return on equity are negative, you might want to ask if you desire to own a stock that is operating at a loss.

Chapter 9 Investment Assignment (Project) (Part 4) (textbook 12th edition p.354)

Part 3 requested that you obtain ratios such as the return on equity and the profit margin. A high profit margin and a high return on equity are desirable, but those data are derived from the firms balance sheet and do not consider the actual price that you have to pay for the stock. The following ratios add the stocks price to help determine whether you should buy or sell the stock.

1. Fill in the following table for each of your companies.

Stock P/E P/B P/S PEG

2. Rank the stocks from best to worst (e.g., lowest P/E to highest P/E, lowest P/B to highest P/B).

Stock P/E P/B P/S PEG

3. Are the rankings consistent? Based on the valuation ratios, which stocks appear to be the best and the worst? Are you having trouble drawing a conclusion?
4. Add the beta coefficients to the initial table.

Stock P/E P/B P/S PEG beta

5. The next table concerns dividends and earnings.

Stock Dividend Dividend yield Estimated growth rate Historical growth rate

You may have trouble finding growth rates, especially if the firm is operating at a loss. High dividend yields and high growth rates increase the stocks attractiveness.

6. Based on the information that you derived, would you sell any of the ten stocks that you selected?

******************************************************************************************************************

Chapter 8: formulas

Liquidity Ratios: Current ratio: measures a company's ability to pay short-term and long-term obligations

• Current assets / current liabilities

Profitability Ratios %: Gross profit margin: assess a company's financial health and business model by revealing the proportion of money left over from revenues after accounting for the cost of goods sold

• (sales - cost of goods sold) / sales

Return on Assets: an indicator of how profitable a company is relative to its total assets

• Earnings after taxes / total assets

Return on Equity: the amount of net income returned as a % of shareholders equity

• Earnings after taxes / equity

Leverage (Capitalization) Ratios %:

Debt ratio: the proportion of a company's assets that are financed by debt

• Debt / total assets

Chapter 9: formulas

Price-earnings (P/E) ratio = Market Value per Share / Earnings per Share

Price per share book value = Market price per Share/Book value of the latest quarter per Share

Book Value per Share = (Total Assets - Total Liabilities) / # of shares outstanding

Sales per share = (total Revenue/Sales) / Average shares outstanding

PEG ratio = P/E ratio / Earnings growth rate

Adjusted PEG ratio = P/E ratio / Growth rate + Dividend yield