Mechanics of the assignment should include all of the following and be structured as follows:
a. Table of contents
b. Introduction
c. Financial and statistical analysis (Excel)
d. Conclusion & recommendation
e. References
Congratulations!! You have been just hired as an equity analyst. You are asked to analyze the companies historical data for the two companies below
1. Walmart (WMT)
2. Tyson Foods (TSN)
GENERAL QUESTIONS
1. Provide a brief descriiption of the companies that you chose.
2. Provide a brief descriiption of the industry in which the company operates.
FOLLOW BELOW STEPS FOR YOUR ANALYSIS
A. Use Excel to calculate the following measures:
1. Download the monthly prices for companies you chose and S&P 500 index prices for last 5 years (5Y) from the finance.yahoo.com
2. Calculate the monthly returns for each company and Market index.
3. Calculate the average return for each company and Market Index (S&P 500 index)
4. Calculate the standard deviation for each company and Market Index.
5. Calculate the correlation between each company and Market Index.
6. Estimate Beta and the R-squared for each company using Excel functions SLOPE and RSQ.
B. Using Excel, run a regression of the each companies returns against the Market returns.
Use the Excel to run the regression for each company. When you use this function, be sure to select the market returns as the X data and security returns as the Y data. This regression results show you intercept and coefficient. Based on the regression results, what is beta for each company?
C. Excel CAPM Calculation
Use the CAPM to calculate rate of return for each company. Assuming that risk-free rate is 5 % and using the Beta of company that you calculated.
D. Based on your analysis, answers the following questions:
1. How each company and market are correlated? Explain?
2. Compare the each companys Beta and Market Beta? Which company is risker?
3. What is the R-squared for each company? And what does it mean?
4. What proportion of each stocks risk is market risk, and what proportion is diversifiable risk?
5. Which company you will invest and why?
