FIN 402 Week 3

Individual CAPM Web Exercise

Resource: Fundamentals of Investment Management

Prepare a response to the following assignment:

Web Exercise (Ch. 21) of Fundamentals of Investment Management, including calculations for each organization listed in Step 9

Learning Team Relative Performance Analysis Paper

Resources: Week Three readings

Prepare a 1,050- to 1,750-word paper in which you address the following:

Research the companies the team chose in Week Two using tools such as Yahoo Finance, NASDQ.com, other online resources as well as the company websites.

Determine the five-year average return for each security.

Identify the securities industries.

Determine the average five-year average return in each industry.

Identify three additional stocks in each industry and determine the five-year average return for each.

Compare your securities performance to those in the same industry and industry average.

Determine whether or not changes must be made to your portfolio.

Attach supporting Microsoft Excel tables and graphs to your paper. Spreadsheets must detail all calculations.

Format your paper consistent with APA guidelines.

Discussion Questions

What is the relationship between inflation and interest rates? How does this relationship affect asset prices? How does the unemployment rate affect interest rates? How do changes in interest rates affect the balance of payments?

What is the difference between systematic and unsystematic risk? How is the beta coefficient used to assess risk? Is it better to maximize return or minimize risk? Why?

What factors must be taken into consideration when creating an investment portfolio? How must a portfolios components be weighted? Is it important to calculate the weighted average risk? Why or why not?