Ch. 1 INTERNET/EXCEL EXERCISES 1. Review the information for the common stock of IBM

| June 9, 2016

Question
Ch. 1 INTERNET/EXCEL EXERCISES

1. Review the information for the common stock of IBM, using the website http://finance.yahoo.com. Insert the ticker symbol “IBM” in the box and click on “Get Quotes.” The main goal at this point is to become familiar with the information that you can obtain at this website. Review the data that are shown for IBM stock. Compare the price of IBM based on its last trade with the price range for the year. Is the price near its high or low price? What is the total value of IBM stock (market capitalization)? What is the average daily trading volume (Avg. Vol.) of IBM stock? Click on “5y” just below the stock price chart to see IBM’s stock price movements over the last five years. Describe the trend in IBM’s stock over this period. At what points was the stock price the highest and lowest?

2. Repeat the questions in exercise 1 for the Children’s Place Retail Stores (symbol PLCE). Explain how the market capitalization and trading volume for PLCE differ from that for IBM.

Ch. 2 INTERNET/EXCEL EXERCISES

1. Go to http://research.stlouisfed.org/fred2. Under “Categories,” select “Interest rates” and then select the three-month Treasury-bill series (secondary market).

Describe how this rate has changed in recent months. Using the information in this chapter, explain why the interest rate changed as it did.

2. Using the same website, retrieve data at the beginning of the last 20 quarters for interest rates (based on the three-month Treasury-bill rate) and the producer price index for all commodities and place the data in two columns of an Excel spreadsheet.

Derive the change in interest rates on a quarterly basis. Then derive the percentage change in the producer price index on a quarterly basis, which serves as a measure of inflation. Apply regression analysis in which the change in interest rates is the dependent variable and inflation is the independent variable (see Appendix B for information about applying regression analysis). Explain the relationship that you find. Does it appear that inflation and interest rate movements are positively related?

Ch. 3 INTERNET/EXCEL EXERCISES

1. Assess the shape of the yield curve by using the website

.bloomberg.com/”>www.bloomberg.com. Click on “Market data” and then on “Rates & bonds”, is the Treasury yield curve upward or downward sloping? What is the yield of a 90-day Treasury bill? What is the yield of a 30-year Treasury bond?

2. Based on the various theories attempting to explain the yield curve’s shape, what could explain the difference between the yields of the 90-day Treasury bill and the 30-year Treasury bond? Which theory, in your opinion, is the most reasonable? Why?

Ch. 6 INTERNET/EXCEL EXERCISES

1. Go to http://research.stlouisfed.org/fred2. Under “Categories,” select “Interest rates.” Compare the yield offered on a T-bill with the yield offered by another money market security with a similar maturity. What is the difference in yields? Why do you think the yields differ?

2. How has the risk premium on a specific risky money market security (versus the T-bill) changed since one year ago? Is the change due to a change in economic conditions? Explain.

3. Using the same website, retrieve interest rate data at the beginning of the last 20 quarters for the three-month T-bill and another money market security and place the data in two columns of an Excel spreadsheet. Derive the change in interest rates for both money market securities on a quarterly basis. Apply regression analysis in which the quarterly change in the interest rate of the risky money market security is the dependent variable and the quarterly change in the T-bill rate is the independent variable (see Appendix B for more information about using regression analysis). Is there a positive and significant relationship between the interest rate movements? Explain.

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