GROUP ASSIGNMENT 1. Select a company and submit your choice. 2. Provide the reason(s) for your choice, a description, a brief History of the firm, its lines of business, and the firm's competitors. Description: Use Bloomberg to get a brief description (few Lines). You can cut and paste the description make sure you put the text in quotation marks and include the source. Mergent Online is another source. You can access Mergent from our schools website by following the steps: AcademicsLibrariesResources Databases All Subjects and then click on M History: Can be obtained from the companys website, Bloomberg. Competitors: Use Bloomberg and while in F8 type SPLC you will see the peers listed at the bottom of the screen or type RV- the names of peers appear on the LHS of the screen. Use Mergent, under search type the name or ticker symbol for the company you selected and then select competitors. Choose five out of the list of competitors (the ones that are closest in size to the firm selected). 3. Use the Capital Asset Pricing Model to estimate the required rate of return. You will need the following data: Risk-Free Rate Return on the Market Beta of the Company (report both VLIS and Bloomberg beta) Report the beta from Value Line Investment Survey Log on to the Iona website, AcademicsLibrariesResources Databases All Subjects and then click on V. Log on to Bloomberg then the equities Module (F8) type the company name and then type beta. Use the adjusted beta for your calculations of the required rate of return. Log on to Bloomberg then the equities Module (F8) type the company name and then type EQRP (equity risk premium) to get the return on the market and the risk free rate. 4. Estimate the 'true' value of the company using the DDM if the firm pays dividends, or other valuation models if the company does not pay out dividends. Log on to Bloomberg then the equities Module (F8) type the company name and then type DDM If the company you selected does not pay dividends, then use the pure earnings valuation model to calculate intrinsic value. P = (P/E) x EPS P/E = Forward 12- month P/E ratio EPS = forecasted EPS for the following year To apply this model, log on to Bloomberg then the equities Module (F8), type the company name, and then type EE (earnings Estimates). Make sure that the periodicity for earnings is annual. 5. What is the rate of return that you would have received had you purchased the stock a year ago? To calculate the actual rate of return, find the price of the stock a year ago and todays price. Go to yahoo finance, type the company name, select "Historical Data", then set the time period as for example 4/1/22 to 4/1/23, click on "apply" and you will get all daily prices for the entire year. Use the "adjusted closing prices" in the formula below: [Price on 4/1/2023 - Price on 4/1/2022] / Price on 4/1/2022 to calculate the actual rate of return. The adjusted closing prices adjust for stock splits and dividends. 6. How does the stocks return compare with that of the market? Go to https://us.spindices.com/index-finder/ for Asset Class select "Equity", then S&P500 then "Fact Sheet" to download the pdf file that provides the net total return for 1 year. Compare the one- year S&P500 Index return to the return you calculated in part 5 on a risk- adjusted basis. 7. Would you purchase the stock today? Why? Why not? Explain. Compare the true value of the stock from Part 4 to the current price to determine over or under valuation.