Stock A Stock B Share price $18.00 $12.00 Shares Outstanding (millions) 4,000 12,000 Book/Price 0.173 0.866

Monthly returns: February 2018 14% -16% March 2018 20% -16% April 2018 -26% 4% May 2018 -8% 9% June 2018 -15% 9% July 2018 11% -24% August 2018 26% 0% September 2018 10% -7% October 2018 -14% 27% November 2018 28% 10% December 2018 -3% 12% January 2019 6% 8%

Today is February 1, 2019. Use the information in the above table to answer the following questions: 1. Calculate the 6-month momentum for both stocks. On the basis of this calculation, would these stocks be good candidates as winners, losers, or neither? 2. Calculate the 12-month momentum for both stocks. On the basis of this calculation, would these stocks be good candidates as winners, losers, or neither? 3. On the basis of 6-month momentum and market cap, which stock is a better candidate for a momen- tum strategy? 4. On the basis of 6-month momentum and B/P, which stock is a better candidate for a momentum strategy?

Answer rating: 100% (QA)

To calculate the 6month momentum we need to sum the monthly returns over the past 6 months for each stock Lets perform the calculations Stock A 6month ... View the full answer