Quantitative Exercises and Portfolio Analysis
Part One: Quantitative Exercises
In this part of the assignment, you will:
1.Determine the value of stocks: preferred and common.
2. Estimate the value of stock with high growth and then estimate the value of stock with constant growth.
3. Determine the components of stock valuation models.
4. Determine the value of bonds paying annual and semi-annual interest payments and determine the yield to maturity of bonds paying annual and semi-annual interest payments.
Complete the assignment using this template. You may utilize the formulas in Microsoft Excel and/or a financial calculator. Be sure to encapsulate your results with embedded formulas in the spreadsheet using the mathematical equations or the steps taken on the financial calculator.
Deliverable-
Part Two: Final Project 2: Portfolio Analysis
Part A: Research Online Trading Sites and DRIPs
For this part of the assignment you will evaluate the choices in purchasing stock via online brokerage accounts (where you can buy and sell stock via the Internet) and the use of dividend reinvestment plans (known as DIPs and DRIPs) or mutual funds or index funds.
For online brokers, you will be looking for the requirements to open the accounts costs, minimum balances and other features. For the reason that most DIPs or DRIPs are available from publicly traded companies you can search their Web sites or a search engine on these plans as well as their requirements.
You are to compare and contrast online brokerage to DIPs and DRIPs.
Required:
Research online trading sites and DRIPS as outlined below as well as summarize your findings. Make sure to include a summary table of the relevant information.
1. Search three online trading sites as well as determine the requirements for trading including the price per trade. Compare as well as contrast the online trading companies.
2. Search the Web for three companies (look for investor information) that offer DIPs or DRIPs.
3. Compare and contrast the requirements including minimum investments, nature of the return, costs and other features.
Part B: Research Market Data on Bonds
Research the current (within the last two months) market data on bonds from AT&T, Dell and IBM. Assume each bond has a par value of $1000 unless otherwise indicated. Cite your sources.
AT&T
Dell
IBM
Coupon
Maturity
Frequency
Rating
Required-
1.Complete the table above.
2.Calculate the value of the bond if your required return is 5% on AT&T, 6.5% on Dell, and 8% on IBM.
3.Determine the yield to maturity (YTM) on the bonds given the current price. Based on each bond's ratings as well as your determination of its yield to maturity describe how you rank each bond for risk and return.