Stock Analysis and Portfolio Development

Prompt: This milestone involves creating a draft of the stock analysis and portfolio development sections of the final project. Use the provided spreadsheet to calculate your portfolio’s standard deviation and the Final Project Scenarios document. 

Specifically, the following critical elements must be addressed: 

II. Stock Analysis: In this section, you will select five stocks from the provided list and determine their values by applying an appropriate valuation model from the following options: price to multiple model (earning or sales), dividend valuation model, or free cash flow to equity valuation model. 

• Determine the value of each stock by using an appropriate model based on the characteristics provided for each stock; use each model at least once.
• Provide a rationale for the stock valuation method you chose for each stock. Cite specific information to support your decisions.
• Using the calculated valuation, the current market price, and historical performance, determine the expected return for each stock.

III. Portfolio Development: In this section, you will develop a portfolio for a client (Ezra or Jacob and Rachel) based on the client’s risk tolerance, return objectives, and liquidity objectives. You will select appropriate assets from the provided list. 

• For the client, develop a portfolio from the list of assets provided that is informed by your analysis of the client’s objectives and (if applicable) the stock valuation you determined.
• Calculate the expected portfolio return using the CAPM (beta) model. Based on the risk tolerance and return objective of the client you didn’t choose for this assignment, would you design an investment portfolio that has a higher or lower expected portfolio return, and why?
• Calculate the expected portfolio standard deviation. Based on the risk tolerance and return objective of the client that you didn’t choose for this assignment, would you design an investment portfolio that has a higher or lower expected standard deviation, and why?
  Rubric

Guidelines for Submission: Your client analysis should be a 3- to 5-page Microsoft Word document, double spaced, with 12-pt. Times New Roman font, one-inch 

margins, and citations cited in APA format. Note that your submission may be longer than 6 pages as work must be shown for all calculations. You may use and upload an Excel workbook to show your calculations. In your written paper, if you are referring to data that is found within an uploaded Excel workbook, be sure to include a citation—for example, “the portfolio’s expected return is 7.2% (E64, Sheet1, WB1),” where E64 is the cell that the calculation took place in, Sheet1 is the tab, and WB1 is designating the name of your file. This ensures that your instructor can quickly and accurately check data entry, formula use, and financial calculations. 

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