Relative Performance Analysis Paper

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Relative Performance Analysis PaperUsing the stock market to invest in securities can be risky but with a little research and a carefully thought out investment strategy the road to financial security can be successful. In this paper, Team A will 1) determine the five-year average return for Walt Disney, Wal-Mart, Time Warner, Dell, Motorola, and US Treasury Bonds, 2) identify the industries of each of these six securities, 3) determine the average five-year average return for each industry, 4) identify three additional stocks in each industry and determine the five-year average return for each security, 5) compare the selected securities' performance to those in the same industry and to the industry average, and lastly, Team A will…show more content…
Motorola's common stock par value at the end of 2007 was $3 per share. Motorola's current stock is trading at $10.33 a share (as of August 15, 2008). Motorola's stock has had highs and lows over the past 5 years, but for the most part has performed well and increased over that time. The last year has been an exception to that five-year growth, as Motorola stock has declined 42% compared to the same time last year.

Motorola's five year average stock price is $17.49 (Yahoo Finance, 2008). Up until February of 2008, Motorola's stock performed very similar to the communications equipment industry, as well as to the S&P 500 for the past five years. Motorola has, in fact, performed better over the past five years than the NASDAQ Composite Index. The five-year average return on Motorola stock is 11.9%. Compare that to the industry average of -2.8% during the same period and Motorola stands out in its industry.

Although Motorola compares favorably to its industry's five-year average return, that is not the case with its three largest competitors. Nokia has averaged a 16.7% return for the past five years. Qualcomm has averaged a 24.7% return and Ericsson has averaged a 37% return during the same five-year period (Morningstar, 2008).

US Treasury BondUnited States Treasury Bonds, or T-Bonds, are marketable, U.S. debt securities that have a fixed interest rate and very little risk. T-Bonds are issued in various
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