C. Assess investment performance utilizing specific performance measurements.

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Running Head: COMPANY AND MARKET ANALYSIS

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Company and Market Analysis

Company and Market Analysis

The financial market plays a huge role in enabling the smooth running of capitalist economies as it allocates resources and creates liquidity for entrepreneurs and businesses. The financial market usually eases trading of financial holdings for sellers and buyers. The financial market usually creates security products that offer a return to creditors and investors and avail funds to borrowers (Delen, Kuzey, & Uyar, 2013). These markets embody trading various types of investments, such as bonds, equities, derivatives, and currencies. They are dependent on information transparency to guarantee efficiency and appropriateness in setting prices. There are various forms of financial markets, including the bond market, derivative market, and stock market, among others. The XYZ company will concentrate on the stock market by focusing on five stocks; Apple, Caterpillar. Macy’s, Northern Trust, and Consolidated Edison stocks (Hult et al., 2012).

The stock market is affected by macroeconomic factors, including inflation rate interest rates, economic growth, and unemployment rate. Notably, financial markets root for rapid economic growth and lower interest rates since they imply more returns for firms and increased stock values. Decreasing interest rates usually have a definite sway on the market movements since they are viewed as a herald for the growth of the economy (Faello, 2015). Similarly, the high inflation rate has a detrimental effect on the stock market since it signifies a potential increase in the interest rates in the future, which, in turn, slows down economic growth. Also, the increasing rate of unemployment foretells a declining growth in the economy, while a falling rate of unemployment foretells future growth (Hult et al., 2012). The graph shows the effect of the macroeconomic factors on returns in the financial market for the past five years.

The chart above shows that high inflation and interest rates have harmed the stock market returns., for the past few months, the movement in interest rates and inflation concerning stock market return has been the same due to the impact of COVID-19 pandemic (Hult et al., 2012).

Company Valuation

Apple Inc.

Apple Inc. engages in the design, manufacture, and sale of personal computers, smartphones, wearables, tablets, accessories, and related services globally. The technology provides its customers with the iPhone series, Mac computers, iPods, AirPods, Beat products, iPod touch, wearables, Apple Watch, and Apple TV, among another vast array of products. The company also offers digital streaming services and content stores, iCloud services that offer the storage of digital media, documents, mail, and contacts; and Apple care services and related support.

Caterpillar, Inc

Caterpillar Inc. engages in manufacturing and selling mining and construction equipment, natural gas, diesel, and industrial gas turbines. The company’s construction industries department provides cold planes, compactors, asphalt pavers, and utility vehicles, among other offerings. The Resource Industries division offers hydraulic shovels and electric rope, rotary drills, and machinery components among a wide array of other products. The financial product segments offer financing and operating leases, working capital loans, insurance, and risk products, and wholesale financing. The company also produces filters and fluids, precision seals, fluid transfer products, among others. The company has its headquarters in Illinois.

Consolidated Edison

Consolidated Edison provides gas, regulated electric, and steam delivery business operations in the US. The company provides electric services to about 3.5 million consumers in the NYC and Westchester county, gas to intimately 1.1 million consumers in Manhattan, parts of Queens, the Bronx, and Westchester county. The company operations are predominantly in the US. In addition to running 543 circuit miles of transmission lines, 64 distribution substations, 15 transmission substations, and 3,745 pole miles of overhead distribution lines, among others, the company operates a renewable energy infrastructure project. The company markets industrial to electricity, residential, commercial, and government consumers.

Northern Trust

Northern Trust is a financial holding firm which engages in providing asset servicing, wealth management, asset management, and banking solution to families, institution, corporations, and individuals globally. It also provides employee benefit services, foreign exchange, securities lending, transition management services, treasury management, brokerage services, cash management services, and banking. It also offers financial consulting, family business consulting, guardianship and estate administration, brokerage services, family financial education, and business and private banking services. The firm also offers asset management services, cash management, and multimanager advisory products and services, among others. The company is headquartered in Chicago (Macrotrends, 2020).

Macy’s

Macy’s is an omnichannel retail firm that operates stores, mobile applications, and websites. The company markets a range of merchandise such as accessories for women, men, and children, home furnishings, and cosmetics, among other products. The company currently runs about 680 departmental stores, 190 specialty stores, among others. The company also operates bluemercury.com, macys.com, and bloomingsdales.com. Additionally, the company provides licenses and operates spa retailers and beauty products. The company is headquartered in New York.

Stakeholders

Portfolio

Executive Summary

References

Elton, E. J., Gruber, M. J., Brown, S. J., & Goetzmann, W. N. (2014). Modern portfolio theory and investment analysis (9th ed.). New York: Wiley Custom.

Faello, J. (2015). Understanding the limitations of financial ratios. Academy of Accounting and Financial Studies Journal, 19(3), 75.

Delen, D., Kuzey, C., & Uyar, A. (2013). Measuring firm performance using financial ratios: A decision tree approach. Expert Systems with Applications, 40(10), 3970-3983.

Hult, H., Lindskog, F., Hammarlid, O., & Rehn, C. J. (2012). Risk and portfolio analysis: Principles and methods. Springer Science & Business Media.

Macrotrends.net (2020). Macy's Financial Ratios for Analysis 2005-2020 | M. Macrotrends.net. Retrieved from https://www.macrotrends.net/stocks/charts/M/macys/financial-ratios.

Macrotrends.net. (2020). Apple Financial Ratios for Analysis 2005-2020 | AAPL. Macrotrends.net. Retrieved 29 April 2020, from https://www.macrotrends.net/stocks/charts/AAPL/apple/financial-ratios.

Macrotrends.net. (2020). Northern Trust Financial Ratios for Analysis 2005-2020 | NTRS. Macrotrends.net. Retrieved 29 April 2020, from https://www.macrotrends.net/stocks/charts/NTRS/northern-trust/financial-ratios.

Effects of macroenonmic factors on stock market

Interest rates 42125 42156 42186 42217 42248 42278 42309 42339 42370 42401 42430 42461 42491 42522 42552 42583 42614 42644 42675 42705 42736 42767 42795 42826 42856 42887 42917 42948 42979 43009 43040 43070 43101 43132 43160 43191 43221 43252 43282 43313 43344 43374 43405 43435 43466 43497 43525 43556 43586 43617 43647 43678 43709 43739 43770 43800 43831 43862 43891 0.12466666666666666 0.12322580645161291 0.129 0.13032258064516128 0.13806451612903226 0.13600000000000001 0.1235483870967742 0.11766666666666667 0.24064516129032257 0.34290322580645161 0.37517241379310345 0.36225806451612902 0.36533333333333334 0.36516129032258066 0.37766666666666665 0.39161290322580644 0.39677419354838711 0.39633333333333332 0.39645161290322578 0.40666666666666668 0.54 0.64967741935483869 0.65678571428571431 0.78612903225806452 0.89600000000000002 0.90741935483870972 1.04 1.1506451612903226 1.1570967741935485 1.1533333333333333 1.1538709677419354 1.157 1.3016129032258066 1.4145161290322581 1.4175 1.5061290322580645 1.6923333333333332 1.7 1.8196666666666668 1.91 1.9148387096774193 1.9546666666666668 2.1877419354838712 2.1976666666666667 2.274193548387097 2.4 2.4 2.4051612903225807 2.4236666666666666 2.390967741935484 2.3776666666666668 2.4029032258064515 2.1258064516129034 2.0430000000000001 1.8296774193548386 1.5533333333333332 1.5509677419354839 1.5506451612903227 1.5831034482758621 inflation rate 42125 42156 42186 42217 42248 42278 42309 42339 42370 42401 42430 42461 42491 42522 42552 42583 42614 42644 42675 42705 42736 42767 42795 42826 42856 42887 42917 42948 42979 43009 43040 43070 43101 43132 43160 43191 43221 43252 43282 43313 43344 43374 43405 43435 43466 43497 43525 43556 43586 43617 43647 43678 43709 43739 43770 43800 43831 43862 43891 0.33200000000000002 0.49772727272727274 0.50363636363636366 0.55571428571428572 0.65 0.5714285714285714 0.69263157894736838 0.72772727272727278 0.66526315789473689 0.47199999999999998 0.33727272727272728 0.19047619047619047 0.2119047619047619 0.1740909090909091 3.85E-2 8.8260869565217392E-2 0.11571428571428571 9.7500000000000003E-2 0.32 0.55619047619047624 0.42099999999999999 0.4 0.48565217391304349 0.39105263157894737 0.4668181818181818 0.45818181818181819 0.54600000000000004 0.4334782608695652 0.36799999999999999 0.49809523809523809 0.49571428571428572 0.503 0.54 0.75736842105263158 0.75190476190476185 0.74142857142857144 0.83590909090909093 0.79476190476190478 0.77476190476190476 0.79 0.88105263157894742 1.040909090909091 1.113 1.0163157894736843 0.92 0.79947368421052634 0.65809523809523807 0.59571428571428575 0.56863636363636361 0.374 0.30636363636363634 0.04 0.1125 0.1459090909090909 0.17157894736842105 0.14476190476190476 3.6666666666666667E-2 -0.11157894736842106 -0.1168 1818181818182 S & P 500 returns 42125 42156 42186 42217 42248 42278 42309 42339 42370 42401 42430 42461 42491 42522 42552 42583 42614 42644 42675 42705 42736 42767 42795 42826 42856 42887 42917 42948 42979 43009 43040 43070 43101 43132 43160 43191 43221 43252 43282 43313 43344 43374 43405 43435 43466 43497 43525 43556 43586 43617 43647 43678 43709 43739 43770 43800 43831 43862 43891 -0.28461931170502031 -2.1011672375900514E-2 1.9742029696721453E-2 -6.2580818167202845E-2 -2.6442831573227132E-2 8.2983117760394132E-2 5.0486926072412786E-4 -1.7530185176314439E-2 -5.073532197294639E-2 -4.1283604302990717E-3 6.5991114577365062E-2 2.6993984808731941E-3 1.5324602357572603E-2 9.1092112097812539E-4 3.5609801125254359E-2 -1.2192431360480427E-3 -1.2344508443253854E-3 -1.9425679279557517E-2 3.4174522187570444E-2 1.8200762196895148E-2 1.7884358171464498E-2 3.7198160337279074E-2 -3.8919718808450021E-4 9.0912085493182193E-3 1.157625139134133E-2 4.8137750908554544E-3 1.9348826118030571E-2 5.4643281108557318E-4 1.9302978533243698E-2 2.218813533034969E-2 3.7200430103365711E-3 3.4342557364422932E-2 5.6178704444133087E-2 -3.8947372061896912E-2 -2.6884498624825115E-2 2.718775131643536E-3 2.1608341965291933E-2 4.8424360241865472E-3 3.6021556221367268E-2 3.0263211466054596E-2 4.2942871026614426E-3 -6.9403356024429486E-2 1.7859356788848979E-2 -9.1776894596563907E-2 7.8684401655036762E-2 2.9728889126352298E-2 1.7924256211817147E-2 3.9313498395682656E-2 -6.577773118928687E-2 6.8930163925612131E-2 1.3128152149977756E-2 -1.8091627281326739E-2 1.7181177829208583E-2 2.0431770730503063E-2 3.4047037421886195E-2 2.8589818964716907E-2 -1.6280925822201864E-3 -8.411048367946572E-2 -0.12511928245982329