Using the stocks in your initial portfolio, prepare a valuation of each stock and the initial portfolio using zero, constant or variable growth models with a market return at 8% and at 12%.

Stocks Portfolio

	Price	Price
Stock	(Initial Investment)-9/9/2016	11/3/2016	Number of shares	Total Investment	Portfolio Allocation
Activision Blizzard	42.79	43.37	3,000	128,370	13%
Capital One	72.02	72.32	4,000	288,080	29%
Exxon Mobil	93.35	83.66	2,000	186,700	19%
Starbucks	54.00	53.00	3,000	162,000	16%
EBay	32.42	28.06	4,000	129,680	13%
Total Investment				894,830	90%
Cash Position				105,170	10%
Total Amount				1,000,000

*Note that the growth rate must be less than the required rate of return

*Make sure you list the date of the valuation and the closing share price of your firm’s stock.

*Each firm’s required rate of return will depend on its beta.

1. Is the stock of each of these companies over or undervalued?
2. What is the expected return using the CAPM Model?
3. Prepare a time series ration analysis (Liquidity, Activity, Debt and Profitability Ratios) and identify any events during the past month that may have caused the stocks’ prices to increase or decrease, and explain how events affect the stocks’ prices?

Answer rating: 100% (QA)

Answer Given below Price market 8 12 returns Initial Investment D1keg 8 12 ... View the full answer