Assignment 2: The CAPM and Final Project 4: Report and Presentation

| February 25, 2017

Question
Assignment 2: The CAPM and Final Project 4: Report and Presentation

Part One: The CAPM

Olter, Inc. is starting its risk management program for the company and has asked for your help in determining critical risk measurements for the firm. The company has identified several factors in the market that they believe are critical for your tasks:

The risk-free rate is 6%
The required return on the average stock is 13%
Olter’s average return is 13%
Required:

1. What is Olter’s beta coefficient?

2. How does the beta coefficient influence the firm’s stock value?

3. What is the required rate of return for Olter?

4. In terms of risk, how does Olter compare to the average firm in the market?

5. If Olter’s beta increased to 1.6, what would you expect to happen to the required rate of return and what does this mean for the firm?

Deliverable:

By Tuesday, May 14, 2013, submit the completed assignment to the W5: Assignment 2 Dropbox. Use a Microsoft Excel spreadsheet that illustrates your calculations. You may use the formulas embedded in Microsoft Excel and/or a financial calculator for these calculations.

Name your document SU_FIN2030_W5_A2_part1_LastName_FirstInitial.

Part Two: Final Project 4: Portfolio Return and Risk; Report and Presentation

Part A: Portfolio Return and Risk

Required:

Select four stocks from finance.yahoo.com, google.finance.com, or moneycentral.msn.com. One should be a clothing manufacturer, one should be a retailer, one should be an automobile manufacturer, and one should be a restaurant or food producer.

1. Obtain the closing price, the change in price from the previous day, and the beta.

2. Calculate the return on holding the stock for a day (this should be the change in price over the closing price without the change).

3. Calculate a portfolio return with weights of 0.25 for each stock.

4. Calculate a weighted beta with weights of 0.25 for each stock.

5. Summarize the implications of the portfolio return and risk with respect to what you learned about beta and the CAPM.

Deliverable:

By Tuesday, May 14, 2013, submit the completed assignment to the W5: Assignment 2 Dropbox. Use a Microsoft Excel spreadsheet that illustrates your calculations. You may use the formulas embedded in Microsoft Excel and/or a financial calculator for these calculations.

Name your document SU_FIN2030_W5_A2_part2_LastName_FirstInitial.

Part B: Report and Presentation

Required:

Combine all the research and data you have completed for the Final Project assignments from Weeks 2–4, along with your results from this week:

Week 2: Amortization
Week 3: Portfolio Analysis
Week 4: Government Securities
Week 5: Portfolio Return and Risk
Analyze and present your findings in a comprehensive final report.

Deliverables:

1. Create a comprehensive report using Microsoft Word. Include a Microsoft Excel document that illustrates your calculations for all weeks. You may use the formulas embedded in Microsoft Excel and/or a financial calculator for these calculations.

Name your document SU_FIN2030_Final_Report_LastName_FirstInitial.

By Tuesday, May 14, 2013, submit your responses to this Final Project assignment to the W5: Assignment 2 Dropbox.

2. By Tuesday, May 14, 2013, create a 10–15 slide Microsoft PowerPoint presentation that summarizes your findings for all Final Project assignments completed in Weeks 2–5. Submit it to the Discussion Area by Tuesday, May 14, 2013. Be prepared to answer questions and comment on at least two other presentations.

Name your document SU_FIN2030_Presentation_LastName_FirstInitial.

Assignment 2 Grading Criteria

Maximum Points

Correctly answered the questions in Part One of this assignment.

50

Researched available resources and identified the necessary resources for the assignment.

40

Correctly calculated the return for the portfolio.

40

Effectively combined all research and data and completed a formal analysis and presented those findings in an effective final paper.

50

Prepared a PowerPoint presentation with the findings for the four-week project and participated in the discussions.

40

Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation.

30

Total:

250

For assistance with any problems you may have when completing this assignment—OR—to offer your assistance to classmates, please use theProblems and Solutions Discussion area located through the left side navigation link.

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