Stock analysis - calculate the required rate of return

Assignment Help Financial Management

Reference no: EM1378491

Practical Exercise: Stock Analysis

The purpose of this project is to familiarize you with the stock market. Using publically available data from msn, and corporate websites this project will guide you through basic stock analysis based on the Gordon Growth and CAPM models. In order to "get a feel for" this process you will evaluate the performance of 3 firms. Based on your analysis you will recommend "the best" for investment.

1. Choose your stocks:
2. Gather your dividend information and calculate ANNUAL g:
This will be different for each firm because you will have to go to the corporate website to gather the data.

3. Calculate the required rate of return (r) on your stock using CAPM:

Use the current 52 week T-bill return of .225% to proxy for your first free return
Use the current annual S&P 500 return of 9.29% to proxy for the market return

4. Calculate the stock price using the Gordon Growth model.
5. Analyses your results:

How do your calculated stock prices compare to the company's current stock prices?

What do you think is causing them to deviate? This will require you to investigate a little into your stock.

Of the three stocks you evaluated, which if any would you invest in? Why?

Reference no: EM1378491

Questions Cloud

Explain how are culture and individual psychology related : Anthropology - Explain how are culture & individual psychology related. For example, does culture some explain how "cause" individual personality. Is individual behaviour patterned.

Operating principles and market analysis : To present a complete business plan for Able Company to the Strategic Officers Steering Committee. Able Company is a United States manufacturing firm located in Tennessee that builds power tools,

Illustrate what does cultural construction mean : Anthropology- Illustrate what does cultural construction mean. Explain why cultural instead of, say biological. Who says it's a cultural construction is gender constructed. If so explain how is it constructed.

Methods used to record revenues and expenses : After years of dreaming about having your own business, you decided that having a coffee shop would be perfect. Rather than start from scratch,

Stock analysis - calculate the required rate of return : The purpose of this project is to familiarize you with the stock market - calculate the required rate of return on your stock using CAPM:BAD 350- Managerial Finance

Issues with cataloguing regalia are similar to those : Archeology- Issues with cataloguing regalia are similar to those with cataloguing ephemera. Archivist Alpha described importance of detailed finding aids

Conditions favoring unionization : Four conditions favoring unionization are: poor leadership, lack of dignity and respect, lack of communication, and low wages.

Illustrate what came inflation begin again in monarchs : Archeology- Illustrate what Came inflation begin again in monarchs continued to print world-system like at end of century and revived 16th pre-classical money and demand loans period in 500BC.

Do traditional drinking practices have origins in antiquity : Archeology- Do Traditional Western European Drinking Practices have Origins in Antiquity. Introduction to Medical Anthropology and Alcohol Outline of Medical Anthropology method Explain why Alcohol.

User Account

All Pages