General Mills Beta, The Lower Price Volatility

Fama and French’s three factor model attempts to explain the variation of stock prices through a multifactor model that includes a size factor and BE/ME factor in addition to the beta risk factor. Fama-French model essentially extended the CAPM (which breaks up cause of variation of stock price into systematic risk which is non-diversifiable and idiosyncratic risk which is diversifiable) by introducing these two additional factors. Fama and French find that stocks with high beta didn’t have consistently higher returns than stocks with low beta and this indicates that beta was not a useful measure under their model. Their model is based on research findings that sensitivity of movements of the size and BE/ME factor constituted risk, and

After levering the equity beta, the asset beta of the firms are calculated. As mentioned we think that the three discount brokerages (highlighted in green) should be used as comparables for Ameritrade. The average asset beta of the three firms is 1.386. As a comparison the investment services firms have average asset beta of 0.603 and the one internet company (Mecklermedia) for which enough historical data is

“Supply chains cannot tolerate even 24 hours of disruption. So if you lose your place in the supply chain because of wild behavior you could lose a lot. It would be like pouring cement down one of your oil wells” (Friedman, T. n.d.). The introductory quotation from American Journalist Thomas Friedman establishes the purpose of this essay. This essay will briefly exhibit two factors that would change the demand for the product produced by GNC (General Nutrition Center); as elaborated upon in the last Session Long Project (SLP) this is the franchise I’ve selected for study during the duration of this session. Next, will be a short overview of activities that would affect changes in supply. After that, how could quantity demanded by changed? Finally, the type of demand the GNC product promulgates whether it is elastic or inelastic. First, let us dive into the two factors would change the demand for the GNC product.

Here we choose VW NYSE, AMEX, and NASDAQ data as market returns, because it’s value weighted and more reliable. The results show CSC’s equity beta = 2.27, QRG’s equity beta = 1.79.

5. EverGrow corporation has a beta of 1.10 just paid a dividend of $1.35. The risk-free

Over the course of time I have been following the three stocks in the fast food industry. I have been following Starbucks, McDonald and Yum Brands. I have collected information on my stocks and their progress. In my research I have found surprising statistics on the three company stocks I chose. In my paper I will explain how the following companies’ stocks I chose and how they did as well as the reasons their stocks affect their current and future progress.

* Stock Beta: Exhibit 5 shows a detailed measurement of the company’s stock returns in relation to the rest of the market through 5-year historical price and index data. The analysis includes monthly returns of both the NYSE and the S&P 500 index in order to capture a comprehensive view of the market return. In each comparison, the monthly returns of the Target stock and market are plotted on Y-axis and X-axis respectively to get the regression line’s slope or beta. The analysis arrives at an average beta of 0.988 which indicates a similar movement of Target stock’s returns in comparison to the whole market over time.

The regression that we performed in excel for both stocks yielded a beta of .73576 for Reynolds, and a beta of 1.4198 for Hasbro. In question 2 we learned that although Reynolds stock was riskier independently, adding it to the portfolio made it more diversified compared to adding Hasbro, due to the fact that it was less correlated to the market portfolio. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Therefore, since the beta of Reynolds is lower than Hasbro, our beta calculations align with the fact that Reynolds stock makes the overall portfolio less risky. This finding is also intuitive when considering the nature of the companies; Reynolds is a Tobacco company meaning that is should be less sensitive to changes in market conditions than a toy company like Hasbro.

It is important for stockholders to continuously re-evaluate their investments. Although some investors do this more frequently and thoroughly than others, the majority of shareholders do so at least once each year. Therefore, Torres’ desire to update her analysis in order to determine whether Costco was still operating efficiently makes perfect sense. After thorough examination, my analysis proves that Costco remains one of the industry’s leading competitors and there seems to be no reason for Torres to sell her shares as long as she wishes to retain holdings of a retail wholesale club in her portfolio.

Most rely on valuation heuristics involving P/E, PEG, and price-to-sales . The simplicity of using heuristic triggers dependence on valuation heuristics as an alternative for the fundamental valuation. P/E, PEG, and price-to-sales need few variables and use simple formulas. Therefore , the estimates are rather perceptive THUS subject to bias. The cause of these biases arise from weak assumption made towards P/E, PEG, and price-to-sales inputs.

1. What is value investing? What is its rationale? What are GMO’s main arguments in favor of value investing?

A common practice to determine the firm’s beta is to draw from historical data from published sources or compare numbers to competitors. In this case, Heinz can compare to Kraft, Campbell Soup and Del Monte and use professional judgement in determining the stock’s sensitivity to the market. A stock’s beta can be determined using a formula as well.

Of these 6 comparable companies, 3 of them are kitchen and bath companies and the rest 3 deals with engines and generators. Hence an average of the asset beta has been taken for these two sub groups which represent different business segments. Finally to arrive at the asset beta which would reflect the riskiness/volatility of Kohler, weighted average of these two betas has been taken as provided in the calculations below:

Throughout the semester we really had to watch the markets in order to obtain a successful portfolio. The way we approached this task was through constant watching of the securities market to find out current trends as well as picking up stocks we thought were undervalued at that time. The latter, of course, applies to our managed portfolio, where we were able to select stocks we deemed were good investments. We observed that this specific portfolio gave us more stable returns, which we attributed to the lower betas of these stocks. One can also conclude that the worst performers of the same portfolio were due the same cause. Based on the returns of our managed portfolio, one can conclude that we chose to

Using the CAPM formula, we can plug in the equity beta for MCI, we can determine