material- fundamentals of investing. that is already in chegg study.
thank you for your reply. kindly answer my question
Part I: Sources of Risk
Choose one company which is a member of the S&P/TSX 60 Index (you can find a list here by scrolling to the bottom of the page and clicking on Constituents S&P/TSX 60 Index (CAD)). Using the types of risk outlined in the Chapter 4 of the text, research and clearly explain the various sources of risk related to this company.
Part II: Stocks in the News
Find one recent news story (from the past month) about one equity trading anywhere in the world and explain both the story and how the lessons from the text apply to help understand the story. Be sure to include a link to the appropriate web page.
Your submission should be no more than 750 words total (including both questions), plus an appropriate references section. Review the Assignment Rubric so you can see how marks will be awarded.
When you own stock in a company, you own an actual parthowever smallof that company and all the profits that it makes after paying all of its costs and paying debt holders. Thats pretty exciting by itself! But the main reason that people choose to invest in (buy) stocks is the hope of having more money in the future than they have todaythey want to receive dividends through time and for the stock price to increase. Historically, this has been a good plan. While stocks dont do better every year, over time they have outperformed most standard asset classes like bonds or cash. This doesnt come without risk. There can be considerable variability and there is always a potential for losseven over the long term. For example stock prices in Japan are still at about half the level of their peak in 1989.
In this Unit you will look not only at how stock returns compare through time and around the world, but also make sure that you understand the different features of stocks and different types of stocks. First, it is important to understand just what a stock is and some of the different types that you will hear about and read about. If you decide that you want to buy a specific stock, how much will you pay? It is now easy to find stock prices on the internet, but how do you read the details of the stock quotes? How much will your broker charge you to execute the transaction? Even when talking about the value of a stock, that isnt necessarily what you will pay. There are many different versions of value that investors talk about, and since it is your money you want to make sure that you are paying the right one!
One way that shareholders are compensated for investing their money is dividends. When a company earns money every year (and sometimes even if they dont), they will retain some of that money to help to grow the business (such as R&D, new machinery or a new IT system) and some of that money will be paid to the owners of the businesshe shareholders. While we will not focus on how those decisions are made, it is important that you understand how and when you will receive your dividends and how they are generally quoted. Sometimes these dividends are not paid out in cash, but in stock, which may or may not be what you wanted!
Whether you choose to trade regularly or buy and hold for the long term, and whether you prefer local or international stocks, large stable companies or small startups with lots of potential and lots of risk, stocks are likely to form a significant part of most investment portfolios.
Assignment 1: Risk Analysis - Instructions and Submission Part I: Sources of Risk Choose one company which is a member of the S&P/TSX 60 Index (you can find a list here by scrolling to the bottom of the page and clicking on Constituents S&P/TSX 60 Index (CAD)). Using the types of risk outlined in the Chapter 4 of the text, research and clearly explain the various sources of risk related to this company. Part II: Stocks in the News Find one recent news story (from the past month) about one equity trading anywhere in the world and explain both the story and how the lessons from the text apply to help understand the story. Be sure to include a link to the appropriate web page. Your submission should be no more than 750 words total (including both questions), plus an appropriate references section. Review the Assignment Rubric so you can see how marks will be awarded. Outcome Assessed Outstanding 17-20 Demonstrates ability to analyze Provides rich, thoughtful, insightful analysis. Makes appropriate inferences based on information provided Makes connections Makes many insightful connections between course content, reference material and questions asked Demonstrates ability to research Brings in a range of excellent resources to respond to the question Properly references sources for ideas and words Demonstrates an ability to seek out additional information to deepen understanding of question CLI In Unit 3 you learned the importance of the risk-return tradeoff and explored the potential sources of risk and return for individual stocks. But we don't (and shouldn't!) hold just 1 stock. We hold many different securities which make up our overall portfolio. In this Unit we will explore the importance of diversification and how it affects the overall risk in your portfolio. The amazing thing is that even if you hold several different risky stocks, the overall risk may be lower than the risk on any individual security! When one security is doing well, others may not be doing so well, so while the average return on all the securities is just the average of all the returns, the risk is much lower. If you think about the risk-return tradeoff, this means that you can get just the same return-but at a lower risk level! Standard deviation is still important, but that measures what we call diversifiable or unsystematic risk of an individual security. Because we are able to diversify away some (but not all) of the risk of an individual security, it is important to consider how to measure non-diversifiable or systematic risk. This is the risk that we take just by being in the market. For this we have a seemingly simple, yet very powerful model called the Capital Asset Pricing Model (CAPM). This model has many weaknesses and has been challenged many times by more complicated models, but it is still by far the most widely used model for looking at risk and return on projects and securities. The key measure of systematic risk is B (pronounced beta). The overall market has a B of 1. If a security's returns vary more than the market, then they are considered riskier and have a greater than 1 and if they vary less than the overall market then they are considered less risky and have a bless than 1. The CAPM was the beginning of what is often called Modern Portfolio Theory. In this model we try to look at all the assets available and maximize the expected return for a given level of risk (or equivalently minimize the level of risk for a given level of expected return). This has many practical pitfalls in implementation, but it actually fits well with the more traditional idea of diversification- buy securities from a range of different industries which are not completely correlated to decrease the overall risk through the benefits of correlation. Few people use a pure' modern portfolio theory approach, but understanding why this works can help you to diversify your portfolios and reach your investment goals Assignment 1: Risk Analysis - Instructions and Submission Part I: Sources of Risk Choose one company which is a member of the S&P/TSX 60 Index (you can find a list here by scrolling to the bottom of the page and clicking on Constituents S&P/TSX 60 Index (CAD)). Using the types of risk outlined in the Chapter 4 of the text, research and clearly explain the various sources of risk related to this company. Part II: Stocks in the News Find one recent news story (from the past month) about one equity trading anywhere in the world and explain both the story and how the lessons from the text apply to help understand the story. Be sure to include a link to the appropriate web page. Your submission should be no more than 750 words total (including both questions), plus an appropriate references section. Review the Assignment Rubric so you can see how marks will be awarded. Outcome Assessed Outstanding 17-20 Demonstrates ability to analyze Provides rich, thoughtful, insightful analysis. Makes appropriate inferences based on information provided Makes connections Makes many insightful connections between course content, reference material and questions asked Demonstrates ability to research Brings in a range of excellent resources to respond to the question Properly references sources for ideas and words Demonstrates an ability to seek out additional information to deepen understanding of question CLI In Unit 3 you learned the importance of the risk-return tradeoff and explored the potential sources of risk and return for individual stocks. But we don't (and shouldn't!) hold just 1 stock. We hold many different securities which make up our overall portfolio. In this Unit we will explore the importance of diversification and how it affects the overall risk in your portfolio. The amazing thing is that even if you hold several different risky stocks, the overall risk may be lower than the risk on any individual security! When one security is doing well, others may not be doing so well, so while the average return on all the securities is just the average of all the returns, the risk is much lower. If you think about the risk-return tradeoff, this means that you can get just the same return-but at a lower risk level! Standard deviation is still important, but that measures what we call diversifiable or unsystematic risk of an individual security. Because we are able to diversify away some (but not all) of the risk of an individual security, it is important to consider how to measure non-diversifiable or systematic risk. This is the risk that we take just by being in the market. For this we have a seemingly simple, yet very powerful model called the Capital Asset Pricing Model (CAPM). This model has many weaknesses and has been challenged many times by more complicated models, but it is still by far the most widely used model for looking at risk and return on projects and securities. The key measure of systematic risk is B (pronounced beta). The overall market has a B of 1. If a security's returns vary more than the market, then they are considered riskier and have a greater than 1 and if they vary less than the overall market then they are considered less risky and have a bless than 1. The CAPM was the beginning of what is often called Modern Portfolio Theory. In this model we try to look at all the assets available and maximize the expected return for a given level of risk (or equivalently minimize the level of risk for a given level of expected return). This has many practical pitfalls in implementation, but it actually fits well with the more traditional idea of diversification- buy securities from a range of different industries which are not completely correlated to decrease the overall risk through the benefits of correlation. Few people use a pure' modern portfolio theory approach, but understanding why this works can help you to diversify your portfolios and reach your investment goals
