In this exercise you have to invest in 3 firms selected

A) Consumer Discretionary Sector (Automobile)

B) Consumer Staples Sector (Tobacco)

C) Financial Sector

Invest $10,000,000 of a special portfolio of both "stocks" and "bonds" evenly. The objective of the portfolio is to produce superior returns to those of the S&P 500 over the next 12 months.

Therefore, given the economic environment, the sector sensitivity and performance expected, 3 firms will need to be selected per industry that will outperform their sector.

Requirements:

1) Select stocks and bonds to purchase based on sector and industry analysis

2) Use 3 methods to calculate the relative value of stocks: dividend discount, Gordon model, and P/E or other approved method.

3) Obtain the consensus earnings forecast for the firms

4) Obtain a consensus interest rate forecast

Answer rating: 100% (QA)

Requirements 1 Select stocks and bonds to purchase based on sector and industry analysis ANSWER A Automobile Ford F and General Motors GM B Tobacco Philip Morris PM C Financial JPMorgan Chase JPM and ... View the full answer