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BADM 115 - BADM 115 Financial Management and Markets...

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BADM115 Class Project 1 BADM 115 – Financial Management and Markets Instructions: For your assigned company, prepare a report that answers the following questions. I. ANALYSIS OF FINANCIAL STATEMENTS (5 pts) Using Ratio analysis as a Tool This topic demonstrates the various ways that managers and investors use financial statements. Using your assigned company’s website and Yahoo!Finance, at http://finance.yahoo.com , answer the following: a. How has the stock performed over the past 52 weeks? How does it compare to its industry? b. Do your company’s financial ratios look strong? c. How do your company’s margins, growth rates, and P/E ratios compare to its competitors? List the competitors’ name and ratios compared. II. RISK AND RATES OF RETURN (5 pts) Evaluating portfolio risk and return For this topic, get financial information using Yahoo!Finance (found at http://finance.yahoo.com ). To find a company's beta, enter the desired stock symbol and request a basic quote. Once you have the basic quote, select the "Profile" option in the "More Info" section of the basic quote screen. Scroll down this page to find the stock's beta. a. Identify the beta listed for your company. b. Using Yahoo!Finance, select three (3) companies not in the same industry of your company or each other. What are the betas listed for these companies? List the companies and betas. c. If you made an equal dollar investment in each of the four stocks, what would be the beta of your portfolio? d. Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate the required return on your company’s stock and compare the required return against the return over the last 52 weeks, found in
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BADM115 Class Project 2 the Yahoo!Finance Profile. Is there a difference between these returns? Is this a problem? Why is there a difference? Assumptions and Data: Note that you will need an estimate of the risk- free rate, r RF , the market risk premium. Assume a 5% market risk premium and get the current yield on 10-year Treasury securities from Finance!Yahoo’s frontpage in the Market Summary.
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