I have project in security analysis course i did the first part which is on excel and i am finding difficulties on it if u can help me these are the guidelines, I did point 1, 3 and 4
Its about analysing security for 3 different companies through the guidelines, I did point 1, 3,4 and the excel work its attached in the previous email which is including graphs and some calculation.
Font: 12 pt, Times New Roman; Margin: one inch from all sides, Page should be numbered. Cover page will not be numbered. Cover page will have names of all the members. Spacing: double spaced. No need for table of contents. Graphs and Tables must be nicely presented in the main body of the paper.
Length: The paper should be approximately 10-page long including cover page and references. It may be little larger or smaller. I give more weight on quality than on quantity.
Plagiarism/cut and paste will not be allowed at all. If you want to use other authors’ ideas word for word, do it properly by putting those under quotations. Otherwise, write in your words. Do not use too many quotations because it will reduce your own input. I appreciate your effort.
References should be consistent. That is, only one type will be followed. You cannot mix various styles when giving references.
I will give you points based on cleanliness, originality, effort, depth of analysis and discussion, and format/organization.
Topic and Procedure: It is the stock analysis of a firm of your choice. It is better if you choose a company from www.finance.yahoo.com. The reason is the fact that you will get adequate and quality data. If you choose a firm from other sources, then make sure that all the required data are available. You will follow the steps given below.
1. Choose a firm, two other firms from the same industry (competitors) and a broad index such as S&P 500. Your firm must be a regularly dividend paying firm. You will use monthly data for your analysis. Also use most current data.
2. Give a brief introduction of your firm. You should discuss its history, importance in the market, IPOs, etc. Provide a graph that shows the stock price movements of your firm, two other firms (competitors), and the market in the past five years.
3. Make sure that data for the past five years are available for your firm, two other firms from the industry and the market.
4. Find out the correlation of your firm with the competitors and the market. Find out the beta of your firm. What are your comments on this analysis? If you are a portfolio manager, how will it affect your portfolio decisions?
5. You are interested to find out how you can make profit from your investment in that firm. First do some technical analysis. Use three strategies of technical analysis to predict the bearish/bullish trend of your firm or the market.
6. Let’s now do some fundamental analysis to find out whether or not your stock is correctly priced. Use whatever you have learned in other finance courses to do this part. You can use Constant (Dividend) Growth Model to find the price of the stock. For this you need to know dividends, growth rate and discount rate of the firm. You should know that you must estimate WACC (Weighted Average Cost of Capital) of the firm. WACC is weighted average of cost of debt, preferred stock and equity capital. You also need to use CAPM to estimate cost of equity.
7. Use another method to find out the price of your company. This is the P/E method of firm valuation. The formula is
Price of your firm’s stock = Expected earnings of your firm x Industry average of price-earning ratio.
You can quite easily find the fundamental price of the stock using this formula. Earnings per share and industry average of price-earning ratio are reported in the media.
8. Compare the price of your firm using previous two methods. How different are they?
9. You may also use other relevant information, if you think important (for example, bond rating of the firm).
10. Now, ask yourself – should you buy or sell this stock, based on your analysis? Let us also know your recommendation (that is, buy or sell). Thus, you will basically find the firm is overvalued or undervalued.
11. Give the references.
12. You will give an executive summary at the beginning of the paper.
13. You will provide your findings in the main body of the paper. Other calculations should be provided in the appendix.
Please follow the exact guidelines .
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