Part 4: Risky BusinessLastly, just for fun, El Cap Climbing Company (ECCC) is looking at determining its sensitivity to market fluctuations.Since ECCC isn’t publically traded and can’t look at its own stock history, it must evaluate its competitors. Black Diamond Equipment is its closest competitor, but the company doesn’t have enough trading volume to make any sound conclusions. Leah identifies Callaway Golf Company (ELY) as ECCC’s closest publicly-traded competitor. Even though ELY sells golf equipment, it too is a specialized company selling high-tech sports equipment.Finding Beta with CAPMNote: This information is also in your textbook.CAPM is one of the most thoroughly researched models in financial economics. When beta is estimated in practice, a variation of CAPM, called the market model, is often used. To derive the market model, start with the CAPM:E(Ri) = Rf + β[E(RM) − Rf]Since CAPM is an equation, you can subtract the risk-free rate from both sides, which gives you:E(Ri) − Rf = β[E(RM) − Rf]This equation is deterministic—that is, exact. In a regression, you'll realize that there’s some indeterminate error. You need to formally recognize this in the equation by adding epsilon, which represents this error:E(Ri) − Rf = β [E(RM) − Rf] + εFinally, think of the above equation in a regression. Since there’s no intercept in the equation, the intercept is zero. However, when you estimate the regression equation, you can add an intercept term, which is called alpha here:E(Ri) − Rf = αi + β[E(RM) − Rf] + εThe intercept term is known as Jensen’s alpha, and it represents the “excess” return. If CAPM holds exactly, this intercept should be zero. Think of alpha in terms of the SML: If the alpha is positive, the stock plots above the SML; if the alpha is negative, the stock plots below the SML. You’ll first create a scatter plot and then perform a regression analysis for ELY stock and the mutual fund. Then, use those results to compare and analyze the results.A. Scatter Plotting and Regression AnalysisUse the following steps to create the scatter plot:Go to the Part 4 Stock Data tab in your Excel spreadsheet. Highlight column K–M headings, then hold down the Ctrl button and select cells K-3 through M-62.Go to the Insert tab, click on Scatter Chart, and select the first style.Move the y formulas and the R2 to the bottom right-hand corner of the chart.Now, use the following steps to create a regression analysis for ELY and for the Mutual Fund:First, check to see that you have the ability to run the analysis. Go to the Data tab in Excel, and look for the Data Analysis feature shown in the following image.If you don’t see Data Analysis, you might need to add Analysis Toolpak in Excel. For instructions on how to load the Analysis Toolpak into your version of Excel, visit https://support.office.com/en-us/article/Load-the-Analysis-ToolPak-6a63e598-cd6d-42e3-9317-6b40ba1a66b4. Contact Microsoft Support if you have any issues with this add-in. Once you've completed all these steps, you can continue with your project.Click on Data Analysis. A dialog box with a list of analysis tools will open. Select Regression from the list and click OK.Next, another dialog box opens for you to select your Inputs and Output for the regression. Select the input data ranges by highlighting S&P Risk Premium numbers (x-axes range) and the number for the asset you’re comparing as the y-axes range. Output to a new worksheet (do not type a name in the text box). Select the checkboxes for Labels, Confidence Level, and Residuals. Click OK.

7-1 Final Project Milestone Three: ProjectionsTo complete this assignment, review the prompt and grading rubric in the Milestone Three Guidelines and Rubric document. When you have finished your work, submit the assignment here for grading and instructor feedback.MORE INFORMATIONSAs you prepare your Milestone Three – Business Opportunities papers this week, I wanted to remind you of a few pointers:Review the Milestone Three Guidelines and Rubric (attached).Review the sample milestone (attached) and use it as a template for your assignment.Continue to refine your use of spelling and grammar as this should be a professional and polished document. Remember to use resources included within Word and online resources such as GrammarlyPlease provide a cover page that includes:TitleYour nameName of the schoolName of the courseInstructor name, andDate of submissionInclude page numbers.Key factors to cover areProjectionsProject your company’s likely consolidated financial performance for each of the next three yearsProject the company’s likely consolidated financial performance for each of the next three years. Support your analysis with an appendix spreadsheet showing actual results for the most recent year, along with your projections and assumptions. Remember, your supervisor is interested in fresh perspectives, so you should not just replicate existing financial statements: You should add other relevant calculations or disaggregations to help inform decisions.Modify your company’s projections for the coming year to show a best- and worst- case scenarioModify your projections for the coming year to show a best- and worst-case scenario based on the potential success factors and risks you identified. As with your initial projections, support your analysis with an appendix spreadsheet, specifying your assumptions and including relevant calculations and disaggregations beyond those in existing financial reports.Discuss how your assumptions, forecasting methodology, and information gaps affect your projectionsDiscuss how your assumptions, forecasting methodology, and information gaps affect your projections. Why are your projections appropriate? For example, are they consistent with the company’s mission and priorities? Aggressive but achievable? How would changing your assumptions change your projections?Reference page (in-text citations must match citation list)Appendices (Appendices MUST be attached to your original submission)SpreadsheetsGraphsThroughout your paper, please include the above critical elements and identify the categories with first, second, and third level headings.I have also attached a sample project paper to guide you. As with the previous Milestones, DO NOT use the final project template that is linked to the rubric as it has not been updated for APA 7th ed. Modify the sample paper and use it as a template. It is recommended to rename and keep the same basic headings as they align with the rubric. Submit this milestone as a standalone assignment.As a reminder, ensure that you check out and use the resources available to you within the Shapiro Library - MBA 520, Google Scholar, the Online Writing Center, Purdue Owl, Crossref, UlrichsWeb.com, Grammarly, and the tutoring resources available within the Academic Support Center. If you have a question that another student might have please post it in the General Discussion Board Forum. If anything personal comes up please reach out to me through email (j.vann@snhu.edu) to discuss your need further.

Purpose: This goal of this assignment is to bring attention to media that adds value tothe topic covered in this week’s reading and examine the link between theory and realworldexamples.Task: Find a piece of media, such as a video clip, advertisement, or article, thatexemplifies a concept in this week’s reading. Post the piece of media or a link to thepiece of media to the discussion board. Identify what concept/s it illustrates, explain howit illustrates the concept/s, and analyze as it relates to the chapter. You cannot use apiece of media that has already been posted to the discussion board. Your post shouldbe at least 250 words long. Once you post to the discussion board, respond to at leastone other student’s post.A successful student will:• Identify a piece of media that illustrates a concept in this week’s reading.• Post that piece of media to the appropriate discussion board.• Identify the concept the piece of media exemplifies.• Analyze the piece of media in the context of the chapter concepts.• Avoid posting a piece of media identical to another student’s.• Respond to at least one other student’s discussion board post.• Ensure the discussion board post is at least 250 words long.• Post and respond to another student’s post by the deadline.