A Financial report with the EXCEL workbook

| January 14, 2016

Starbucks (SBUX) http://finance.yahoo.com/q?s=SBUX

MODULE: NBS-6016Y INVESTMENT MANAGEMENT COURSEWORK
Objective: This assignment asks you to prepare a professional investment
management report using data from Yahoo! Finance and the theory and
practices presented in the module.
Submission deadline: 19/01/2016 at 15:00 (3 PM)
Word limit: The report should not exceed 2500 words. This limit excludes the
Appendix with the Excel workbook, but includes the executive summary and the
references.
Question: Assume that you are employed as an analyst for a leading financial
advisory company and that you are asked to prepare an investment analysis
report for a client. The client is interested in diversifying his investment on CocaCola’s stock with another firm’s stock. Your report

should demonstrate that you
have a solid understanding of the investment management theories and tools
covered in the module and that you can communicate this clearly.
In order to prepare your report, you need to download the weekly dividendadjusted closing prices for S&P500, Coca-Cola (KO) and the

potential firm (see
“Firm-Student ID.xlsx” for your firm) for the period 1/1/2013-1/1/2015. Using this
data, you should then use Excel to compute the corresponding weekly returns.
In the report, you should:
Financial information and descriptive statistics
 Briefly discuss three recent news stories (from online sources) about your
firm, which could be of interest to the shareholders. For each story,
explain whether you would expect it to drive the stock price up, down or to
have no price impact. (10 marks)
 Report the mean, the variance and the standard deviation of the weekly
returns for each of the three assets (your firm, Coca-Cola and S&P500).
Explain what each of these statistics indicates according to the theory of
investment management. Also explain which of the three assets is more
attractive to an investor that seeks the minimum risk and which is more
attractive to an investor that seeks the highest mean return per unit of
standard deviation. (15 marks)
 Report the weekly covariance as well as the correlation between the
returns of the S&P500 and your firm and between Coca-Cola and your
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firm. Discuss the kind of relationship in both cases, including appropriate
XY (scatter) plots. (10 marks)
Portfolio selection
 Compute and draw the efficient frontier for your firm and Coca-Cola and
explain why it is important in investment management. Compute the
minimum variance portfolio and show its position in the efficient frontier
graph. (15 marks)
 Given a constant weekly risk-free rate of 0.05%, compute the optimal risky
portfolio that consists of your firm and Coca-Cola. Compute the optimal
capital allocation between the risk-free asset and the optimal risky portfolio
for the client, assuming a risk-aversion of 10. How should your client
spread an amount of $5,000 among the risk-free asset, the stock of your
firm and Coca-Cola? Draw the capital allocation line and show the optimal
capital allocation on the graph. How would you expect the optimal capital
allocation to change if risk aversion increases? (20 marks)
Capital Asset Pricing Model
 Assume that the expected return on the market portfolio is equal to the
average return on the S&P 500 index in the given time period. Also,
assume again a constant weekly risk-free rate of 0.05%. Obtain the beta
for your firm and for Coca-Cola from Yahoo! Finance and compute the fair
expected return of each stock according to the Capital Asset Pricing
Model. Draw the Security Market Line and show the fair expected returns
of the two stocks and of the S&P 500 on the graph. (15 marks)
 Explain which of the two stocks (Coca-Cola or your firm) is riskier for a
fully diversified investor. Compute the alpha of each of these two stocks,
as well as the beta and the alpha of the optimal risky portfolio. What do
the alphas for the stocks and the portfolio indicate in terms of investment
performance? (15 marks)
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Important details
 The file “Firm-Student ID.xlsx” provided in the Coursework folder at the
Blackboard site of the module assigns a real U.S. firm to each student ID.
You should prepare the report for the firm assigned to you.
 To find the data you need, you should use Yahoo! Finance. A link to
each firm’s webpage is provided in the above file as well.
 The question is strongly related to the material covered in Lectures 1-9,
Seminars 1-2 and Labs 1-2 of the module and the associated chapters
from the textbook.
 You should prepare your report in Microsoft Word or in another word
processing software.
 An executive summary (of maximum 250 words) should be included at
the beginning of your report. This should summarise the main points of the
report.
 In each section of the report, you should also include details about the
data you used and the mathematical formulas (e.g., the CAPM) you
applied for your computations. However, try to be brief and clear in
your answers.
 The question should be answered using Microsoft Excel in a single
workbook with multiple worksheets. In the first worksheet, you should
include all the data you obtained from Yahoo! Finance.
 Your submission should include a copy of your Excel workbook as
an appendix to your report. 30% of the coursework mark will be
subtracted from submitted assignments that do not include a copy of
the Excel workbook.
 You should present your models/computation/discussion in Word in a
helpful and clear way. You should also use an appropriate format for the
Excel cells. All graphs should be included in your report as well (Word
file). For more details on successful presentation see:
http://www.uea.ac.uk/polopoly_fs/1.91281!essay_presentation.pdf
 Include at least 3 references to textbooks or articles in credible
professional magazines or academic journals. These should be
included at the end in a list of references. Do not include articles that you
do not cite within your report or that you have not at least partly read.
 Any questions related to the coursework should be submitted to the
“Coursework Questions” forum within the Q&A forum on the
Blackboard Site of the module. The link to the Q&A forum is within the
list on the left. To ask a question, click on Create a New thread and post
your question. You should also click on “Subscribe” to receive an email
when a new question is posted. You should visit the forum on a regular
basis.
 More details about coursework submission can be found at
http://www.uea.ac.uk/calendar/section3/regs(gen)/submission-of-work-forassessment-(taught-programmes)
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UG Coursework Assessment Criteria
In preparing your coursework, you should be aware that you will be assessed by
reference to the extent to which your answers meet the following criteria:
Criterion Weight
Identification and application of knowledge
to the question asked 20%
Evidence of reading and research 10%
Capacity to find data from online resources 5%
Ability to construct investment models
related to the question asked 15%
Ability to correctly implement these models
using spreadsheet software 25%
Demonstration of ability to structure and
present work in a clear and coherent way 15%
Clear and accurate expression 10%
 Please preserve anonymity by using your university number, not your name.
 This coursework counts for 50% of the assessment in this module.
 You should be aware of the standards required for the award of marks for
coursework. These are available at
http://www.uea.ac.uk/learningandteaching/documents/assessment/Undergra
duateMarkingDescriptors
Referencing
Your coursework should clearly distinguish between your original words and
ideas, and those of others. When referring to the work of others, from books,
journals or any other source (including the internet), it is essential that you
make this clear by acknowledging your source and referencing correctly. Failure
to reference correctly will lose you marks and may constitute plagiarism or
collusion. Unless specified otherwise by the module organiser, Norwich
Business School uses the Harvard system of referencing.
University Policy on Plagiarism and Collusion
It is important that all students familiarise themselves with the rules and
regulations regarding plagiarism and collusion. Understanding these rules will
help you to avoid plagiarism, and to maintain the quality of your academic work.
You should ensure that you are familiar and up to date with the Universities rule
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on Plagiarism and Collusion, available at
https://www.uea.ac.uk/learningandteaching/students/studying/plagiarism
You should also make sure that you are familiar with the Business School’s
policy on Harvard referencing which is available in your student handbooks.
Individual study skills support and advice on referencing is also provided by the
Learning Enhancement Service at the Dean of Students Office.
Where work has been submitted in word-processed format, you may be
requested to provide a digital copy of your coursework (after an initial
examination of the hard copy by the coursework assessors) for use with
plagiarism detection software. Instances where plagiarism is suspected will be
investigated by the NBS Plagiarism Officer. Students who are found to have
plagiarised will be penalised.
In proven cases offenders will be punished and the punishment may extend to
degree failure, temporary suspension or expulsion from further study if the case
comes before a Discipline Committee of the University. Work for assessment
should be submitted to the relevant Learning and Teaching Service Hub. Please
ensure that you know the specific location of the submission box in advance of
your first deadline.
General Advice
Before you submit any coursework you should make sure that you are clear and
up to date in your knowledge of university policy and practice.
The University’s policy on Submission of Work for Assessment (Taught
Programmes): Submission of Anonymised Work for Assessment, Word Limits
and Penalties, Extensions and Penalties for Unauthorised Late Submission,
Provisional Marks and Feedback, and Retention of Coursework is published in
the Calendar, and is available at:
https://portal.uea.ac.uk/documents/6207125/7465906/Section+3+Submission+of
+Work+for+Assessment+-+Taught+Programmes.pdf
A penalty will be imposed for exceeding the word limit, which will be clearly
stated in the assignment. Students must include their word count on the
coursework coversheet when they submit their work. The word count for
coursework, written assignments, projects, reports and dissertations shall
include: Footnotes and endnotes (irrespective of whether they have been used
for the purpose of referencing or not, references (in the main text), tables and
illustrations and if applicable the abstract, title page and contents page. Any
appendicised material and the bibliography or reference list shall be excluded
from the word count.
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Word Count Penalties
Up to 10% over word limit No Penalty
10% or more over the word limit Deduction of 10 marks off original mark
Failure to provide an electronic
copy when requested
Mark capped to the pass mark
Intentional misrepresentation of
the word count on the coversheet
Mark capped to the pass mark
Penalties for late submission
The deadline for submission of coursework is 15:00 (3pm) on the
submission/due day. This is for both electronic submission and paper copy
submissions.
If you submit coursework after the published deadline, without an approved
extension, the following penalties will apply:
Work submitted Marks deducted
After 15:00 on the due date and before 15:00
on the day following the due date
10 marks
After 15:00 on the second day after the due
date and before 15:00 on the third day after the
due date
20 marks
After 15:00 on the third day after the due date
and before 15:00 on the 20th day after the due
date.
All the marks the work merits
if submitted on time (i.e. no
marks awarded)
After 20 working days Work will not be marked and
a mark of zero will be
entered
Saturdays and Sundays will not be taken into account for the purposes of
calculation of marks deducted.

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