Australian Multinational Bank Of Australia ( Cba ) And Telstra Corporation Limited ( Tls )
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1. Stocks selection
In this report, three companies, BHP Billiton Limited (BHP), Commonwealth Bank of Australia (CBA) and Telstra Corporation Limited (TLS) are chosen to form part of the investment portfolio. They are all from ASX 100.
BHP is a leading global resources company and one of the world’s largest mining companies (BHP 2014). CBA is an Australian multinational bank providing various financial services in New Zealand, Fiji, Asia and the United Kingdom (CBA 2014). TLS is Australia’s largest telecommunications and media company, and it offers a full range of communications services (TLS 2014). Based on above information, these three companies are from different industries.
2. Determination of individual stock expected returns and standard deviations
2.1 The choice of data
The 2008 global financial crisis (GFC) (Shah 2009, p. 25) has caused the share prices of BHP, CBA and TLS to drop rapidly from 2008 to 2009, apparent from the 10-year historical data of the three companies’ share price (Appendix 1). This shows that the all three companies’ share prices are influenced by the GFC, which means the GFC has the similar result in the calculation of three stocks’ expected return. Hence, the data from that period are included in the data choice.
The 10-year, monthly historical raw data of the stocks’ closing prices and dividends are obtained from Yahoo Finance (2015). The closing price is chosen for calculation purposes, as the closing price of the trading day could