Deliverable:

1. CAPM Required Rate of Return:Using the stocks in your initial portfolio and knowing each stock's beta, can you determine and report the required rate of return for each stockon the Thursday of Week 1, September 7,using the CAPM model? Use and report your best estimate of the risk-free rate as of that date (i.e., Thursday, September 7). Each firm's required rate of return will depend on its beta. Calculate for each stock and for the portfolio the required rate of return using both a market return at 8% and at 12%.
2. Constant Growth Model:Using the stocks in your initial portfolio, create a dollar valuation of each stock using the constant dividend growth model, where next year's dividend is this year's dividend (1 + constant growth rate). Repeat the same step described above to prepare a dollar valuation for the portfolio using the portfolio weighted average rate of return.When conducting a dollar valuation of each stock and the initial portfolio using the constant dividend growth model, the required rate of return for each stock and the weighted-average required rate of return for the portfolio will be based on a market return at 8% and 12% as was determined for the Deliverable Section 1 listed above. You should choose your best estimate of a constant future growth rate for each stock. Note that this growth rate must be less than the required rate of return found above.
3. For each stock, using data for the Thursday of Week 1, September 7 through week 8, Oct 27,report the closing share price, the annual dividend, the beta, the assumed constant growth rate, and valuations found in Section 2 for both market return rates. Based on these valuations and considering the assumptions made concerning risk-free and market rates of return, was each stock at that day's closing price over- or under-valued? Re-evaluate all calculations if trades have been made, reporting all revised results as of the date of the trade(s), reporting that date also.
4. Create a time series ratio analysis (liquidity, activity, debt, and profitability). Identify any events during the period that may have caused the stocks' prices to increase or decrease, explaining how these events affect the stocks' prices.

Stock price and Beta as of September 8.

Lowes $231.29 Beta 1.08

UPS $161.04 Beta 1.09

GE $111.72 Beta 1.22

U (unity) $37.68 Beta 2.41

TSLA $248.50 Beta 2.09