Using these 10 companies:
KO
XOM
WRE
TUP
MRK
AMZN
T
AAPL
VISA
JNJ
a. The beta coefficient for each stock and calculate the beta for your portfolio.
b. What does your portfolio’s beta coefficient tell you about the tendency of the port-folio to move with the market?
c. Find the beta coefficients from another source for each stock. Does the ranking from least risky to most risky for the 10 stocks differ? Are the two portfolio beta coefficients different? What does any difference in the portfolio betas imply about the accuracy of the measures of systematic risk associated with your portfolio?
d. How has each stock performed since the assignment began? What is the portfolio currently worth? What is the percentage change in the portfolio? In Part 1, you invested $10,000 in each of 10 stocks and set up a watch account at a site such as Yahoo! Finance. Some of the sites provide the ratios illustrated in this module. This assignment asks you to determine if any of the stocks you selected meet any of the following ratio requirements:
Current Ratio
at least 1:1
Profit Margin
minimum of 8%
Return on Assets
minimum of 10%
Return on Equity
minimum of 15%
Long-Term Debt-To-Total Assets
not to exceed 40%
Notes:
a. (Most sources use long-term debt and not total liabilities. If you wish to use total liabilities to compute the debt ratio, you may find that information on the firm’s balance sheet.)
Although these ratios do not indicate whether the stock is over-or undervalued, they can be a good place to start. For example, if the return on assets and the return on equity are negative, you might want to ask if you desire to own a stock that is operating at a loss.