Question: Using the stocks in your initial portfolio, do a valuation of each stock and the initial portfolio using zero, constant or variable growth models with
Using the stocks in your initial portfolio, do 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.
Is the stock of each of these companies over or undervalued?
What is the expected return using the CAPM Model?
do 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?
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
Study Help