Choose two publicly traded companies from two different industries that have not been chosen by other students.
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Question:
Choose two publicly traded companies from two different industries that have not been chosen by other students. One stock should be a value stock (low beta, low p/e, low B/M, Low EPS growth rate, Low P/S) and the other should be a growth stock (high beta, high p/e, high M/B, high EPS growth rate, high P/S). So high beta means a beta that is higher than the beta of the market, or 1. So high P/E ratio means a P/E ratio that is higher than the P/E of the market. Go to yahoo.com or NASDAQ.com and download their monthly prices for the past five years.
Questions:
1) Estimate the average monthly return for each stock.
- 2) Estimate the standard deviation of monthly returns of each stock
- 3) Which stock has the highest and the lowest total risk? Highest and lowest Systematic risk?
- 4) Compare these two stocks (Risk-return trade-of).
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1118845899
3rd edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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