Good morning,
This is a group project. I was assigned to do Part B, everything that is highlighted in the instructions. As an attachment, you can find an example of the word document and the excel doc for this project from a previous group. Our group was assigned to work in SunTrust Bank, but this company merged with BB&T on 12/19/2020 to form Truist Bank. Please take a look at the example project. I need to do one graph for each bullet on part B and write an analysis as in the example work doc. All calculations and work should be shown to the professor. I have attached 4 Excel documents that one classmate provided to do this. Please let me know if you have any questions you can contact me at any time. Thank you.
Category: Finance
The goal of this homework is to review and apply the material learned in the past two weeks including:
Market Participants and Non-Market Participants and their roles
Evaluation
Alpha/Beta
VaR
Sharpe Ratio
Instructions
Please use the following use the following template to complete the homework assignment: FIN 542 – Homework #2
When completing the homework please consider the following:
Show all your work and supporting steps in calculations
Use complete sentences and proper grammar when responding to qualitative questions
For quantitative questions, please highlight the final answer(s)
Include all relevant workbooks or files used to complete the homework
Please try to do this digitally, it is sometimes difficult to read handwriting
Submit either word, pdf, or excel files (when applicable), please no photographed work
The two attached excel files will be essential in completing the homework. You will use these files similarly to how we demonstrated in many of the calculations demonstrated in the learning materials using excel.
EWJ.xlsxDownload EWJ.xlsx
Eurekahedge Japan Index (EHFI 68).xlsxDownload Eurekahedge Japan Index (EHFI 68).xlsx
When working with excel and data in general, just some helpful hints and things to be cognizant of:
Be mindful if the dataset is being presented in chronological vs reverse chronological order
When comparing datasets, be mindful of the time range for each data set. Shorter data sets will the limiter of comparison; you can’t compare one data set period to another which has no data
Yahoo data is weird. For monthly data, they may have a date 12/1/1999. This date actually implies data for the end of November 1999, or 11/30/1999’s data point
Decimal and % are not the same in presentation for excel. If you see 25.31 it does not mean the same as 23.51% (that is unfortunately .2351). Be careful here as this can yield wildly different results
Be mindful of empty or missing data and removing them from the calculations
Problem 1.
Consider three investors.
Homework AD 717 Week 1 – The Investment Environment
1. Bryant is a 25-year old young professional, employed in a major city in the northeast. Since joining the workforce three years ago, he contributes as much money as possible to his retirement accounts which is invested in a diverse set of index funds. An avid fan of Benjamin Graham’s “The Intelligent Investor”, he has decided to consider a few individual stocks of companies with good and stable long-term prospects as well as a great management.
2. Nicole is 52 years old, and a few months ago, she retired from her well-paying job after aggressively saving and investing her money prudently for much of her life. While she could go back to work if necessary, she prefers her financial independence. In order to maintain a steady cash-flow, her portfolio is heavily geared towards high yielding stocks, allowing her and her family to live of dividend payments for the most part. Aware of the downturn of General Electric and their dividend cut, she focuses on companies from which she expects a solid and steady dividend growth.
3. Peter is in his mid 30s. He did not start a well-paying job until two years ago, and therefore, he is behind on his retirement savings. To make up for lost time, he is contributing the maximum allowed to his individual retirement account (IRA), which is invested in market ETFs. Additionally, he sets aside $10,000 every year for the next ten years for risky high-growth investments.
Following up on our group exercise in class, discuss if the stocks of Amazon (AMZN), Target (TGT), General Motors (GM) and Tesla (TSLA) are suitable investments for these three investors. Explain why or why not.
Problem 2.
Next week, we will start a stock market game. You will be given $100,000 in equity, and you can borrow up to $100,000 more in margin. Write a report (400-500 words) describing your investment philosophy.
Discuss how you want to allocate your funds across asset classes (bonds, stocks, as well as countries) and the reasoning behind your allocation. If you are going to invest in specific companies, describe how you have selected your securities. The report should describe your investment goals and the strategy which you’re pursuing to achieve these goals.
To this end, make sure you elaborate on the following points:
• Classify investments into growth stocks vs. value stocks or small firms vs. big firms.
• Explain your risk management, e.g., how is your portfolio hedged against market
downturns?
Problem 1.
Consider three investors.
Homework AD 717 Week 1 – The Investment Environment
1. Bryant is a 25-year old young professional, employed in a major city in the northeast. Since joining the workforce three years ago, he contributes as much money as possible to his retirement accounts which is invested in a diverse set of index funds. An avid fan of Benjamin Graham’s “The Intelligent Investor”, he has decided to consider a few individual stocks of companies with good and stable long-term prospects as well as a great management.
2. Nicole is 52 years old, and a few months ago, she retired from her well-paying job after aggressively saving and investing her money prudently for much of her life. While she could go back to work if necessary, she prefers her financial independence. In order to maintain a steady cash-flow, her portfolio is heavily geared towards high yielding stocks, allowing her and her family to live of dividend payments for the most part. Aware of the downturn of General Electric and their dividend cut, she focuses on companies from which she expects a solid and steady dividend growth.
3. Peter is in his mid 30s. He did not start a well-paying job until two years ago, and therefore, he is behind on his retirement savings. To make up for lost time, he is contributing the maximum allowed to his individual retirement account (IRA), which is invested in market ETFs. Additionally, he sets aside $10,000 every year for the next ten years for risky high-growth investments.
Following up on our group exercise in class, discuss if the stocks of Amazon (AMZN), Target (TGT), General Motors (GM) and Tesla (TSLA) are suitable investments for these three investors. Explain why or why not.
Problem 2.
Next week, we will start a stock market game. You will be given $100,000 in equity, and you can borrow up to $100,000 more in margin. Write a report (400-500 words) describing your investment philosophy.
Discuss how you want to allocate your funds across asset classes (bonds, stocks, as well as countries) and the reasoning behind your allocation. If you are going to invest in specific companies, describe how you have selected your securities. The report should describe your investment goals and the strategy which you’re pursuing to achieve these goals.
To this end, make sure you elaborate on the following points:
• Classify investments into growth stocks vs. value stocks or small firms vs. big firms.
• Explain your risk management, e.g., how is your portfolio hedged against market
downturns?
My public traded company is Coca-Cola.
n this assignment, you will recalculate the value of the company’s stock based on your company’s specific required rate of return. To do this, you will calculate the required rate of return for your chosen publicly traded company using the capital asset pricing model (CAPM).
n your paper, address the following five parts in a Word document:
Part 1: (two paragraphs)
Explain the three types of risk and beta, and how these concepts relate to a company’s required rate of return.
Part 2: (two paragraphs)
Find your company’s beta from a credible source.
You can get this information from the Mergent database or by looking it up on a financial website like Yahoo! Finance (Links to an external site.).
Compare your company’s beta to the market beta of 1.0.
Calculate the company-specific required rate of return using the CAPM formula.
Show all calculations.
Use the beta you determined for your chosen company
Use a risk-free rate of 2.0%.
For the market risk premium, use the following assumptions:
For a large capitalization company (greater than $10.0 billion in market capitalization) use 6.0% as the market risk premium.
For a mid-cap company (between $2.0 billion and $10.0 billion in market capitalization) use 8.0% as the market risk premium.
For a small-cap company (less than $2.0 billion in market capitalization) use 11.0% as the market risk premium.
Compare the company-specific required rate of return you calculated to the required return based on size you used in Section 3: Dividend Analysis and Preliminary Valuation in Week 3 for the constant growth formula.
Determine whether the company-specific required rate of return higher or lower than the rate of return based on size that you used in Section 3 in Week 3 for the constant growth formula?
Explain the difference in required rate of returns.
Part 3: (two to four paragraphs)
Recalculate both estimates (the low-end and the high-end) of the stock price using the constant growth formula.
Use the company’s specific required rate of return you determined using the CAPM.
Review your selected high-end and low-end growth rates from Week 3.
If either growth rate is higher than the new CAPM discount rate, you must reduce your selected growth rate(s).
Your growth rates cannot be higher than the discount rate, because the calculations will result in a negative stock price, which is not meaningful.
Include a short, written explanation to explain the revised growth rates.
Show your revised high-end and low-end stock price calculations
Compare each of the two recalculated stock prices to the current stock price per share of the company.
State whether each recalculated stock price (low-end and high-end) is above or below the current market price.
State whether each recalculated stock price (low-end and high-end) indicates if the stock price is currently under-valued or over-valued in the market.
(See Section 9.3: Required Returns in your course text.)
State your recommendation for your concluded stock price for the company.
Use either the high-end stock price or the low-end stock price from the constant growth formula using the CAPM required rate of return.
Justify the conclusion of value for your stock based on the most important financial facts from the prior weeks’ analysis.
You are writing a book on how to evaluate performance evaluation for a company.
Respond to the following in a minimum of 175 words:
Think about some of the influences and measures of company performance that you read about this week.
Explain the use of return on assets (ROA) and the price-to-earnings (PE) ratio in evaluating the performance of a company.
Write about how to calculate ROA and PE ratio and how market conditions can affect these metrics.
Share the ROA and PE ratio for a company you are familiar with. What do these metrics tell you about the financial health of the company?
Learning Goal: I’m working on a finance question and need guidance to help me learn.
What are the key priorities of F Mayer Imports?
What are the pros &cons of each proposed solutions in Exhibit 3?
What is the optimal hedging strategyfor F Mayer Imports given the situations?
Learning Goal: I’m working on a finance question and need an explanation and answer to help me learn.
the topic is : the impact of migration on the economic growth
Is this topic in the field of finance, what makes it finance in your eyes?
My school says that this topic is more related to economics I need to prove its more related to finance,
Learning Goal: I’m working on a finance discussion question and need an explanation and answer to help me learn.
DISCUSSION PROMPTDescribe how raw human emotion dictate your financial decisions. Illustrate either with at least one example.
Does this impact your decision of your chosen five stocks (Coca-Cola Co, Apple Inc, Advance Micro Devices Inc, Exxon Mobil Corp, Procter and Gamble Company)?
Include how you would feel about risk and reward with your decisions effecting the financial well-being of your employees.
Learning Goal: I’m working on a finance discussion question and need an explanation and answer to help me learn.
Discussion PromptDescribe how raw human emotion dictate your financial decisions. Illustrate either with at least one example.
Does this impact your decision of your chosen five stocks (Microsoft Corporation, NVIDIA Corporation, AstraZeneca PLC ADR, VISA Inc, Walmart Inc)?
Include how you would feel about risk and reward with your decisions effecting the financial well-being of your employees.