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[answered] Look up the following 10 stocks (recommended site: http://f


3.? Look up the following 10 stocks ?(recommended site:? http://finance.yahoo.com/? .)

Exxon Mobil?? ??????????? XOM

Google??????????????????????? GOOG??????????????????????? a.??? ?For each stock, find:? *location of its headquarters

Newmont Mining??????? NEM?????????????? ? ????????? *sector and industry

JC Penney?????????????????? JCP???????????????? ? ????????? *price (will vary by day you look it up)?????????????????????

General Electric ????????? GE?????????????????? ?????????? * trailing EPS? (past 12 months) and P/E ratio

Apple ???????????????????????? AAPL???????????? ?????????? *trailing dividend per share (past 12 months)

Wellpoint???????????????????? WLP??????????????? ? ????????? *beta estimate

Ford Motor???????????????? F????????????????????? ? ????????? *market cap

Wells Fargo???????????????? WFS??????????????? ? ????????? *total debt

??????????????????????????????????????????????????????????? ? ????????? *also calculate debt ratio = total debt/market cap

3. cont'd

b.? Looking at your results, which 3 stocks had the lowest P/E ratios??? Which 3 had the highest P/E ratios? ?("dogs" and "darlings" , maybe we could call them!)

??????????? What are some possible reasons why P/E ratios differ so much between firms? Do you see any relationship or pattern between the level of the P/E ratio and the type of industry?

c. Looking again at your results, which 3 stocks had the lowest beta? estimates??? Which 3 had the highest beta estimates?? Does? there appear to be any relationship between beta, the type of industry, and/or the debt ratio?

4.? Estimating beta from stock price and dividend data.



??????????? From the same website as in problem 3, download the following data:?

??????????? Daily closing price (not adjusted) and dividends, for the dates Mar 1, 2012 ? Feb 28, 2013

For these three assets:? NEM (Newmont Mining);? JCP (Penneys); SPY (Standard and Poor's 500 depository receipts.? The latter is a tradeable asset that mimics the S&P500 index; it will be our proxy for "the market"

a.? Step 1:?? calculate daily returns Rn, Rj and Rm.? There are 250 price observations in our data set; use them to calculate 249 observations of Rn, Rj and Rm.?

Ex.? Day 1's return will be? (P2 ? P1)/P1;? day 249 will be (P250 ? P249)/249

??????????? On 4 of the days, you will have to add in the dividend: ( Pn +Dn ? Pn-1)/Pn-1

??????????? Hint:? the data from Yahoo finance is "upside down", newest to oldest date.

??????????? You can use the Sort command on the date, to easily reverse the order

b. Step 2, we will chart the characteristic line and estimate the following regression for NEM

??????????????????????? ?

(Rn ? Rf) =? Bn *(Rm ? Rf) + e

where e is a random error.? Since we are using daily data, and Rf is near zero even on an annual basis, we can simplify this to? Rn = Bn * Rm + e

Method:? make an X-Y scatter chart, with the market return on the X axis and NEM return on the Y-axis. ??(command is Insert chart).? Then add a trendline with equation, setting intercept = 0.? The slope is your beta estimate.??

c.? Step 3, repeat b, but using JCP as your Y variable.


a. b. Stock

 

Headquarters XOM

 

Texas, US GOOGL

 

California, US NEM

 

Colorado, US Sector Basic materials Technology Basic materials Industry

 

Price

 

trailing EPS

 

P/E

 

trailing dividend per share

 

beta...

 


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