Capital asset pricing model (1) and financial research (2)

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in paper 1,Discuss the different variables of CAPM. What are the benefits and limitations of the CAPM? How would you (as a manager) use it in decision making?

ON A SEPARATE PAPER...ADDRESS THE FOLLOWING For Milestone One, you will submit a draft of the Introduction section (I) and the Feasibility section (V) of the final project. You will introduce the company, its leadership, products, and services. Additionally, you will run a financial ratio analysis (picking one ratio in each category of ratio) and compare the results to an industry peer's ratios. You will then analyze the strengths and weaknesses of the company based on the ratio analysis (information ATTACHED)

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FIN 685 Final Project Guidelines and Rubric Overview The final project for this course is the creation of an analysis and recommendations paper. Risk management is the process of identifying, analyzing, and either accepting or mitigating uncertainty in investment decision making. Risk management occurs everywhere in the financial world: when an investor buys low-risk government bonds over more risky corporate debt, when a fund manager hedges their currency exposure with currency derivatives, and when a bank performs a credit check on an individual before issuing a personal line of credit. As a financial analyst or advisor who may be advising organizations and/or individuals on effective investment strategies, it is crucial that you understand the sources of risk and how to avoid, minimize, or mitigate risk in order to achieve the investor’s objectives. The purpose of this final project is for you to demonstrate what you have learned about risk management in a real -world context. You will demonstrate through this project your ability to comprehensively analyze a company as a potential investment opportunity, based on its level of risk and your knowledge of risk mitigation and management techniques. This skill set will serve you well whether you are a managing within a firm, acting as an external consultant to an organization, or handling your own personal investment strategies. The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three, Five, and Seven. The final submission will occur in Module Nine. In this assignment, you will demonstrate your mastery of the following course outcomes:      Determine appropriate asset allocation strategies for ensuring optimal portfolio diversification Analyze organizational characteristics of potential investment opportunities for identifying investments that meet asset allocation and portfolio diversification needs Assess risk associated with potential investment opportunities for ensuring informed investment decision making that balances risk with return Propose risk management strategies appropriate to business-specific scenarios for maximizing return Select appropriate long-term investments from potential opportunities that minimize risk while maximizing return Prompt For this final project, you will research a publicly-traded company of your choice to analyze it as a potential investment opportunity. In your analysis, you will examine risk and techniques for managing it, and synthesize your research and analysis in determining if the company is a feasible investment opportunity. Specifically, the following critical elements must be addressed: I. Introduction: Provide a brief overview of the company you have selected with regard to its potential as an investment opportunity. Be sure to include the following items in your overview: a) What is the size of the company relative to other companies in the industry, both currently and historically? b) What is the company’s leadership position in its industry? In other words, is this company considered a leader or a follower? Be sure to defend your response. c) What is the financial position and profitability of the company, both currently and historically? d) Analyze the company’s major product lines. How important are these major products in generating the company’s revenues? What level of success have the products enjoyed in the marketplace? What is the implication of this on the feasibility of the company as a potential investment opportunity? Consider discussing the interrelationship among product lines, revenue, and investment potential, and be sure to defend your reasoning. II. Investment Analysis a) What is the perception in the market of this company’s stock? b) How would you view this stock as an individual investor? Why? c) What asset allocation strategy might you recommend for including this company’s stock in a portfolio? Be sure to justify your recommendation(s). d) How do you feel a portfolio manager would treat this stock and others from the same industry from an asset allocation perspective? What leads you to this conclusion? III. Risk Analysis a) What is a specific risk that you have identified as relevant to this company, its product(s), and its industry? b) As which type of risk would you classify it? In other words, is it considered stand-alone, corporate, or market risk? Be sure to defend your reasoning. c) What do you feel is the impact of the risk with regard to the company’s external environment (i.e., economic trends, regulatory landscape, and competition), as well as its internal environment (i.e., people, process, and infrastructure)? d) To what extent do you feel this risk can be effectively balanced with return? Be sure to justify your reasoning. IV. Risk Management Strategies a) What risk management technique do you feel would be most appropriately employed to minimize or mitigate the effect(s) of this risk? Why? b) Similarly, what strategies might you suggest for maximizing return in the face of this identified risk? Why? c) What recommendations would you make in terms of determining the effectiveness of these risk/return management measures over time? Be sure to justify your recommendations. V. Feasibility as an investment opportunity a) Calculate one standard financial ratio from each of the broader categories of leverage, liquidity, operating, profitability, and solvency ratios for the company. b) Compare the ratios you calculated for your company to those of its competitors/industry average, and identify discrepancies that you find. For example, an analysis of Coca Cola should include a comparison with PepsiCo, since these two companies are similar in size and scope. c) Analyze the ratio discrepancies between your selected company and its competitors, and explain why you feel these discrepancies exist, as well as their impact on the company’s potential as an investment opportunity. Be sure to defend your reasoning. d) What do you feel are your selected company’s strengths and weaknesses as a potential investment opportunity? What is it doing well? What do you feel are some areas in need of improvement? Be sure to defend your rationale. VI. Conclusion: Based on your overall analysis, would you recommend your selected company as an investment opportunity over its competitors ? Be sure to justify your rationale. Milestones Milestone One: Draft of Introduction (Section I) and Feasibility (Section V) In Module Three, you will submit a draft of the Introduction section (I) and the Feasibility section (V) of the final project. In Milestone One, you will introduce the company, its leadership, products, and services. Additionally, you will run a financial ratio analysis (picking one ratio in each category of ratio) and compare the results to an industry peer’s ratios. You will then analyze the strengths and weaknesses of the company based on the ratio analysis. This milestone is graded with the Milestone One Rubric. Milestone Two: Draft of Risk Analysis (Section III) and Risk Management Strategies (Section IV) In Module Five, you will submit a draft of the Risk Analysis section (III) and the Risk Management Strategies section (IV) of the final project. In Milestone Two, you will analyze the different risks that the company faces and the impact of these risks in regards to the company’s environment. Additionally, you will recommend risk management techniques that minimize the risk and maximize the return for the company. This milestone is graded with the Milestone Two Rubric. Milestone Three: Draft of Investment Analysis (Section II) and Conclusion (Section VI) In Module Seven, you will submit a draft of the Investment Analysis section (II) and the Conclusion section (VI) of the final project. In Milestone Three, you will evaluate the perception of the company’s stock and offer recommendations on this stock to potential investors and portfolio managers. Additionally, the study will provide a conclusion and overall recommendation as to whether the company is a good investment opportunity. This milestone is graded with the Milestone Three Rubric. Final Submission: Analysis and Recommendations Paper In Module Nine, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. The final submission is graded with the Final Project Rubric. Deliverables Milestone Deliverable Module Due Grading One Draft of Introduction (Section I) and Feasibility (Section V) Draft of Risk Analysis (Section III) and Risk Management Strategies (Section IV) Draft of Investment Analysis (Section II) and Conclusion (Section VI) Final Submission: Analysis and Recommendations Paper Three Graded separately; Milestone One Rubric Five Graded separately; Milestone Two Rubric Seven Graded separately; Milestone Three Rubric Nine Graded separately; Final Project Rubric Two Three Final Project Rubric Guidelines for Submission: Your analysis and recommendations paper should be 15–20 pages long. It should be formatted in 12-point Times New Roman font, double-spaced, with one-inch margins. All citations and references should be formatted according to the most current APA guidelines. Critical Elements Introduction: Size Exemplary Meets “Proficient” criteria and utilizes industry-specific language to establish expertise (100%) Proficient Describes the size of the company relative to other companies in the industry, both currently and historically (90%) Introduction: Leadership Position Meets “Proficient” criteria and utilizes industry-specific language to demonstrate expertise (100%) Assesses the company’s leadership position in the industry and defends response (90%) Introduction: Profitability Meets “Proficient” criteria and utilizes industry-specific language to demonstrate expertise (100%) Describes the company’s financial position and profitability, both currently and historically (90%) Needs Improvement Describes the size of the company relative to other companies in the industry, both currently and historically, but response is cursory or inaccurate (70%) Assesses the company’s leadership position in the industry, but response or defense is cursory, illogical, inaccurate, or weak (70%) Describes the company’s financial position and profitability, both currently and historically, but response is cursory, illogical, or inaccurate (70%) Not Evident Does not describe the size of the company relative to other companies in the industry, both currently and historically (0%) Value 4.85 Does not assess the company’s leadership position in the industry (0%) 4.85 Does not describe the company’s financial position and profitability both currently and historically (0%) 4.85 Introduction: Major Product Lines Meets “Proficient” criteria and demonstrates exceptional insight into the interrelationship among product lines, revenue, and investment potential (100%) Analyzes the company’s major product lines in terms of the company’s feasibility as an investment opportunity and defends reasoning (90%) Investment Analysis: Perception Meets “Proficient” criteria and description reflects a particularly insightful assessment of the market’s perception of the company’s stock (100%) Meets “Proficient” criteria and demonstrates exceptional insight into individual investing (100%) Reasonably characterizes the perception in the market of the company’s stock (90%) Investment Analysis: Individual Investment Analysis: Asset Allocation Strategy Investment Analysis: Portfolio Manager Risk Analysis: Specific Risk Reasonably characterizes how stock would be viewed from an individual investor ’s viewpoint and explains why (90%) Analyzes the company’s major product lines in terms of the company’s feasibility as an investment opportunity, but response or reasoning is cursory, illogical, or weakly defended (70%) Characterizes the perception in the market of the company’s stock, but response is cursory or illogical (70%) Characterizes how stock would be viewed from an individual investor ’s viewpoint, but response is cursory, illogical, or weakly defended (70%) Meets “Proficient” criteria and Recommends an asset allocation Recommends an asset allocation demonstrates exceptional insight strategy for including company’s strategy for including company’s into the value of asset allocation stock in portfolio and justifies stock in portfolio, but response (100%) recommendation or justification is cursory or (90%) illogical (70%) Meets “Proficient” criteria and Reasonably characterizes how a Characterizes how a portfolio demonstrates exceptional insight portfolio manager would treat manager would treat this into the value of asset allocation this company’s stock and others company’s stock and others from (100%) from the industry from an asset the industry from an asset allocation perspective and allocation perspective, but explains conclusion response or explanation of (90%) conclusion is cursory or illogical (70%) Meets “Proficient” criteria and Reasonably characterizes risk Characterizes risk associated demonstrates keen insight into associated with the company, its with the company, its product(s), risk identification and product(s), and its industry and its industry, but response is classification (90%) cursory, illogical, or inaccurate (100%) (70%) Does not analyze the company’s major product lines in terms of the company’s feasibility as an investment opportunity (0%) 4.85 Does not characterize the perception in the market of the company’s stock (0%) 4.85 Does not characterize how stock would be viewed from an individual investor ’s viewpoint (0%) 4.85 Does not recommend an asset allocation strategy for including company’s stock in portfolio (0%) 4.85 Does not characterize how a portfolio manager would treat this company’s stock and others from the industry from an asset allocation perspective (0%) 4.85 Does not characterize risk associated with the company, its product(s), and its industry (0%) 4.85 Risk Analysis: Type Meets “Proficient” criteria and demonstrates keen insight into risk identification and classification (100%) Risk Analysis: Impact Meets “Proficient” criteria and cites specific, relevant examples of the impact of risk that establish a robust context for the analysis (100%) Risk Analysis: Balanced Meets “Proficient” criteria and demonstrates exceptional insight into balancing risk and return (100%) Risk Management Strategies: Technique Classifies type of risk, but response is illogical, inaccurate, or weakly defended (70%) Does not classify type of risk (0%) 4.85 Analyzes the impact of the identified risk (90%) Analyzes the impact of the identified risk, but response is cursory or illogical (70%) Does not analyze the impact of the identified risk (0%) 4.85 Assesses the extent to which the risk can be effectively balanced with return, but response or reasoning is cursory or illogical (70%) Recommends risk management technique for minimizing or mitigating the effect(s) of identified risk, but recommendation or reasoning is cursory or illogical (70%) Suggests strategies for maximizing return in the face of the identified risk, but suggestion or reasoning is cursory or illogical (70%) Makes recommendations for determining effectiveness of risk/return management measures over time, but recommendations are cursory or illogical (70%) Does not assess the extent to which the risk can be effectively balanced with return (0%) 4.85 Does not recommend risk management technique for minimizing or mitigating the effect(s) of identified risk (0%) 6.47 Does not suggest strategies for maximizing return in the face of the identified risk (0%) 6.47 Does not make recommendations for determining effectiveness of risk/return management measures over time (0%) 6.47 Assesses the extent to which the risk can be effectively balanced with return and justifies reasoning (90%) Meets “Proficient” criteria and Recommends risk management demonstrates exceptional insight technique for most appropriately into risk management minimizing or mitigating the techniques effect(s) of identified risk and (100%) explains why (90%) Risk Management Meets “Proficient” criteria and Strategies: Maximizing demonstrates exceptional insight into balancing risk and return (100%) Risk Management Strategies: Effectiveness Classifies type of risk and defends reasoning (90%) Meets “Proficient” criteria and demonstrates exceptional insight into effectiveness measurement (100%) Suggests strategies for maximizing return in the face of the identified risk and explains why (90%) Makes appropriate recommendations for determining effectiveness of risk/return management measures over time (90%) Feasibility: One Ratio From Each Accurately calculates standard financial ratios from each category for the company (100%) Feasibility: Compare Compares calculated ratios for the company to those of its competitors/industry average and identifies discrepancies (100%) Feasibility: Discrepancies Feasibility: Strengths and Weaknesses Conclusion Articulation of Response Meets “Proficient” criteria and cites specific, relevant examples that establish a robust context for the analysis (100%) Analyzes ratio discrepancies between company and its competitors and explains why they exist and their impact on the company’s potential as an investment opportunity and defends reasoning (90%) Meets “Proficient” criteria and Analyzes selected company’s cites specific, relevant examples strengths and weaknesses as a that establish a robust context potential investment for the analysis opportunity and defends (100%) rationale (90%) Meets “Proficient” criteria and Explains if selected company makes novel insights into the would be recommended as an company as an investment investment opportunity over its vehicle competitors and justifies (100%) rationale (90%) Submission is free of errors Submission has no major errors related to citations, grammar, related to citations, grammar, spelling, syntax, and organization spelling, syntax, or organization and is presented in a (90%) professional and easy to read format (100%) Calculates standard financial ratios from each category for the company, but with gaps in accuracy or detail (70%) Compares calculated ratios for the company to those of its competitors/industry average and identifies discrepancies, but with gaps in accuracy or detail (70%) Analyzes ratio discrepancies between company and its competitors, but response or reasoning is cursory or illogical (70%) Does not calculate standard financial ratios from each category (0%) 3.88 Does not compare ratios or does not identify discrepancies (0%) 3.88 Does not analyze ratio discrepancies between company and its competitors (0%) 3.88 Analyzes selected company’s strengths and weaknesses as a potential investment opportunity, but response or defense is cursory or illogical (70%) Explains if selected company would be recommended as an investment opportunity over its competitors, but response or justification is cursory or illogical (70%) Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas (70%) Does not analyze selected company’s strengths and weaknesses as a potential investment opportunity (0%) 3.88 Does not explain if selected company would be recommended as an investment opportunity over its competitors (0%) 3.88 Submission has critical errors related to citat ...
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