Investment equity
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20180226005041term_project_notes_finance.docxTerm Project Notes
Assume your portfolio consists of 4 equities, Alpha, Beta Gamma and Delta.
For the price weighted portfolio:
|
|
Alpha |
Beta |
Gamma |
Delta |
Total |
|
Stock price at 2/1/17 (a) |
$45.00 |
$53.85 |
$32.45 |
$87.50 |
$218.80 |
|
Share of Total Value (b) |
.2057 |
.2461 |
.1483 |
.3999 |
1.0000 |
|
Amount to be invested (c ) |
$205,700 |
$246,100 |
$148,300 |
$399,900 |
$1,000,000 |
|
# of shares (d) |
4,571 |
4,570 |
4,570 |
4,570 |
|
(b) for each stock, this is the stock price divided by the total in the last column
(c) for each stock, the number in the cell above (b) times $1 million
(d) for each stock (c) divided by (a)
For the equally weighted portfolio:
|
|
Alpha |
Beta |
Gamma |
Delta |
Total |
|
Stock price at 2/1/17 (a) |
$45.00 |
$53.85 |
$32.45 |
$87.50 |
|
|
Share of Total Value (b) |
.25 |
.25 |
.25 |
.25 |
1.0000 |
|
Amount to be invested (c) |
$250,000 |
$250,000 |
$250,000 |
$250,000 |
$1,000,000 |
|
# of shares (d) |
5,556 |
4,643 |
7,704 |
2,857 |
|
(b) for each stock, this is one quarter of the total investment
(c) for each stock, the number in the cell above (b) times $1 million
(d) for each stock (c) divided by (a)
For the market value weighted portfolio:
(Instead of calculating the market capitalization, you may use the one reported on the date you recorded the first stock price from the same source as your stock price.)
|
|
Alpha |
Beta |
Gamma |
Delta |
Total |
|
Stock price at 2/1/17 (a) |
$45.00 |
$53.85 |
$32.45 |
$87.50 |
|
|
No of shares (millions) (b) |
225 |
700 |
500 |
100 |
|
|
Market Capitalization ($, millions) (c) |
$10,125 |
37,695 |
16,225 |
8,750 |
72,795 |
|
Share of Total Market Cap. (d) |
0.139 |
0.518 |
0.223 |
0.120 |
1.000 |
|
Amount to be invested (e) |
$139,000 |
$518,000 |
$223,000 |
$120,000 |
$1,000,000 |
|
# of shares (f) |
3,089 |
9,619 |
6,872 |
1,371 |
|
(c) for each stock this is (a) x (b)
(d) for each stock, (c) divided by the total market capitalization displayed in the last column
(e) for each stock (d) x $1,000,000
(f) for each stock (e) / (a)
For the bond portfolio, you will select for each company one bond that matures in about 10 years ( 8 to 12 years). You will record the price and yield to maturity on the same dates you record the stock prices. For those dates you will also record the price and YTM for the 10 year Treasury bond. Those 10 year benchmark rates are widely available. The Wall Street Journal site is a good source of this data. If companies in your portfolio have no outstanding bonds, provide that information.
Holding period return in percent is:
[(Ending value – Beginning value + Distributions)/Beginning value]/100
For stocks, distributions are cash dividends paid. For bonds, distributions are coupon payments. Since you are holding the bond for one year, you would receive 2 coupon payments [equal to the coupon rate on the bond times the face value (use $1,000 for each)].
