***ORGINAL WORK ONLY***

Directions: Answer the following questions using the attached Homework #1 assignment. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both.

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A. Using the two stocks you selected from Homework #1, identify the Beta for each stock. Explain what conclusion you can draw from the stocks' current and historical beta? If the stock market went up 10% today, what would be the impact on each of your stocks?

B. Using the 2014 financial statements from your stocks above and the equations from your textbook, prepare the Historical Average and Standard Deviation for each stock.

Homework Set #1: Chapters 1, 2, & 3 Due Week 2 and worth 100 points Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link above. A. In your own words, please identify two different stock exchanges in the United States. Describe the similarities and differences between the two stock exchanges. Identify one stock from each of the two stock exchanges. In the United States; there are several stock exchanges, but the two main ones which are the largest according to their capitalization are New York Stock Exchange and NASDAQ. The New York Stock Exchange (NYSE) is the largest Stock Exchange in the United States and also across the world. NASDAQ Stock Exchange; the second largest stock in both the United States and worldwide, it is also the world's first electronic exchange. Both exchanges are similar in regards to being located in New York City and also the two being the largest stock exchanges in the world. Differences in both exchanges are NYSE is classified as an auction market while NASDAQ is classified as a dealer market. Secondly NYSE is owned by Intercontinental Exchange while NASDAQ is owned by National Association of Securities Dealers. Examples of companies listed under NASDAQ include Facebook, Google and Apple while those listed under NYSE include Wal-Mart, Coca-Cola and General Electric. B. Using the two stocks you identified, determine the free cash flow from 2013 & 2014. What inference can you draw from the companies' free cash flow? GOOGL Free Cash Flows in 2013-2014 Date 1-Apr-14 27-Mar-14 1-Mar-14 Open High Low 557.18 603.17 501.42 2002/1000 Stock Split 601.12 611.2 551.41 1-Feb-14 587.4 612.15 561.9 1-Jan-14 555.65 591.05 539.11 1-Dec-13 529.77 558.41 522.55 1-Nov-13 513.97 532.01 500.62 1-Oct-13 438.48 518.82 419.92 1-Sep-13 425.58 451.3 425.38 Close Adj Close* Cash Flows 525.22 525.22 1,112.0 0 1,212.3 2 1,177.7 4 1,117.6 4 1,056.6 9 1,027.7 6 873.51 555.45 525.22 2.002 555.45 605.56 605.56 588.28 588.28 558.26 558.26 527.82 527.82 513.37 513.37 436.32 436.32 1-Aug-13 1-Jul-13 1-Jun-13 1-May-13 445.83 453.16 441.57 462.27 434.87 453.72 410.09 458.58 FREE CASH FLOWS 421.2 436.17 422.03 406.66 844.58 885.32 877.96 868.83 421.87 442.22 438.54 433.98 421.87 442.22 438.54 -433.98 5180.93 2 Assuming one bought the GOOGL stock on May 1, 2013 at $433.98 the free cash flow by the April 1, 2014 would be $5180.932. This would be calculated by subtracting the initial cost from the sum of the cash flows throughout the period. Walmart Free Cash Flows in 2013-2014 Date 1-Apr-14 7-Mar-14 1-Mar-14 1-Feb-14 1-Jan-14 4-Dec-13 1-Dec-13 1-Nov-13 1-Oct-13 1-Sep-13 7-Aug-13 1-Aug-13 1-Jul-13 1-Jun-13 8-May-13 1-May-13 Open High 76.76 79.99 0.48 Dividend 74.49 77.53 74.19 75.99 78.72 79.47 0.47 Dividend 80.89 81.37 76.97 81.35 73.87 77.63 73.48 76.73 0.47 Dividend 78.42 79 74.99 78.69 75.06 76.87 0.47 Dividend 77.85 79.96 Free Cash Flows Low Close 76.29 79.71 Adj Close* 79.71 73.83 72.27 73.64 76.43 74.7 74.68 76.43 74.7 74.68 76.81 76.59 71.51 72.19 78.69 81.01 76.75 73.96 78.69 81.01 76.75 73.96 72.23 74.09 72.9 72.98 77.94 74.49 72.98 77.94 74.49 74.82 74.84 74.84 Cash Flows 79.71 0.48 76.43 74.7 74.68 0.47 78.69 81.01 76.75 73.96 0.47 72.98 77.94 74.49 0.47 -74.84 768.39 Assuming one bought the Walmart's stock on May 1, 2013 at $74.84, the free cash flow by the April 1, 2014 would be $768.39. This would be calculated by subtracting the initial cost from the sum of the cash flows throughout the period. C. Using the information and formulas from your textbook, please prepare two financial ratios for each stock, using the 2013 & 2014 financial statements, to include: liquidity ratios, asset management ratios, and profitability ratios. You should have a total of six ratios for each stock, per year. What challenges, strengths, or weaknesses do you see? Please be articulate. Google stock performed better within the period since it has a higher P/E, Net Margin Profit and Price to Free Cash Flows. Its major weaknesses however is that it has a lower ROE and Dividend yield compared to Wal-Mart's. Wal-Mart on the other hand had a higher ROE and Dividend Yield. Industry P/E ROE Div. Yield Debt-to-Equity Ratio Net Profit Margin Price to Free Cash flow Walmar t Google 33 19.50 % 12 2.61 150.75 6.65 98.66 0.22 11.43 17.3 155.1 49.6