***For C. Owens Only***

MEMO

To: Florence Neymotin, Associate Professor, HCBE

From: Jane Doe, Business & Financial Analyst, XYZ Investments

Date: September 27, 2020

Subject: Trend analysis of stock prices of US banks

The price of Bank of America (BOA) stock is expected to remain relatively stable in the

short term based on the stock market trend analysis from November 2020 to December 2021.

When compared to the stock price of Citibank, Chase, and other major US banks, however , the

trend of the BOA stock prices contains greater variation and uncertainty. Investing in BOA stock

also poses a greater risk to financial losses in comparison to the fluctuations in stock price of

BOA competitors.

Decision-making I Management Issue

Investing in the stock market presents individuals and businesses alike with economic

opportunities to increase financial assets and to obtain a positive return on investment (ROI). The

increase in assets and ROI, however , depends on making wise financial investments based on

current trends and anticipated continued growth. This analytical brief examines whether

investing in BOA stock is a wise financial decision based on the stock's recent market

performance and projected short-term growth.

Data

The data used in this analytical brief were obtained from weekly New York Stock

Exchange (NYSE) reports. As Table 1shows, stock prices for BOA, Citibank, Chase, PNC, and

Wells Fargo were collected from November 2020 to December 2021. Figure 2 graphs the weekly

fluctuation of BOA stock prices.

Analytical Method

Descriptive statistics were calculated for the data. Specifically, the average, standard

deviation (SD), and coefficient of variation (CV) were used to describe the distribution of the

BOA stock prices and to detect the presence of abnormally low or high stock prices (i.e.,

outliers). In addition, graphs were created to visualize the changes in BOA stock prices over time

(see Figure 1).An high-low graph was created to show simultaneously the changes in stock

prices per month as well as extreme low or high stock prices (see Figure 2).

Page 1of 2

Table 1. Hypothetical stock prices of major US Banks from November 2020 to December 2021

Major US Banks

Average 91.72 84.83 95.36 90.15 98.59

Standard Deviation 11.03 6.58 10.66 6.87 10.85

CV 0.120 0.078 0.112 0.076 0.110

Figure 1. Trend line of hypothetical stock prices for BOA

140

120

100

80

60

40

20 ·- -- - --·-·- - -

0

6-Nov-20 6-Dec-20 6-Jan-21 6-Feb-21 6-Mar-21 6-Apr-21 6-May-21 6-Jun-21 6-Jul-21 6-Aug-21 6-Sep-21 6-Oct-21 6-Nov-21 6-Dec-21

-+-BOA

Figure 2. High-low chart for BOA stock prices with outliers

NOTE: Dates are incorrect in the above figure: It should range from November 2020 through December 2021

Analysis

Table 1 summarizes the changes in stock prices for BOA and its competitors. In

comparison to Citibank and PNC, the average stock price of $91.72 for BOA was higher than the

average stock price for Citibank (i = 84.83) and PNC (i = 90.15). However, in comparison to Chase (i = 95.36) and Wells Fargo (i = 98.59), BOA had a lower average stock price (i =

91.72).

The SD and CV statistics show that the distribution of BOA stock prices has a greater

amount of variability in comparison to its competitors. Specifically, BOA has a SD score of

11.03 and a CV score of 0.12. By contrast, Citibank has a SD score of 6.58 and a CV score of

0.078, which shows that stock price for Citibank was more stable from Nov 2020 to D e c

2 0 2 1 . When compared to the variability of stock prices of PNC, the price of BOA stock had a

larger amount of variability. The variability of Chase and Wells Fargo stock prices were

relatively similar to that of BOA.

Figure 2 shows the presence of 3 extreme values which affect the average stock price and

the variability of the distribution. Based on the trend data, BOA stock fell to $34.34 per share in

November 2020, which was a decline beyond 3 standard deviations. In January 2021, the price

per BOA stock increased to $110.87, an amount above 3 standard deviation. Similarly, in March

2021, the price of BOA stock reached $120.25, which exceeded 3 standard deviations. These

abnormally low and high values suggest that BOA stock may be more sensitive to market forces

in comparison to its competitors.

Decision-making I Management Implications

The trend analysis of the stock prices for BOA suggest that investing in the bank's stock

presents greater financial risks in comparison to its competitors. While the price of BOA stock

has increased overall, the weekly and monthly price fluctuations show that the bank's stock is

more unstable when compared to its competitors. To reduce the risk of financial losses,

investments in BOA, Citibank, Chase, and PNC, and Wells Fargo should be done concurrently.

This will spread the risk of financial losses amongst the stock of the different banks.

Page 2 of 2