Select two similar companies within the same industry that are listed on the Australian Securities Exchange. Create an industry profile using information websites such as http://www.asx.com.au/, https://au.finance.yahoo.com/, http://www.reuters.com/ and http://www.morningstar.com.au/, including: A discussion of the industry and sector structure A table of market leaders and competitors with a comparison of market capitalisation, net income and P/E (include discussion of table) An analysis of Beta including a comparison of company, market and sector Betas (available from Morningstar under Key Measures) Discuss also the key drivers behind each company’s Beta (for example, income, debt, dividend policy, diversification or globalisation) and how these key drivers translate into risk Calculate the correlation coefficient between your companies and the Australian stock market Create a chart displaying the past year daily closing prices of your companies and a relevant Australian market index such as the S&P/ASX300 or All Ordinaries (obtained from Yahoo Finance) Use excel to calculate the correlation coefficients (excel formula =CORREL) Discuss the correlation results and what this relationship could mean if each of the stocks were held in a portfolio For both companies, conduct a Required Rate of Return (RRR) and Expected Rate of Return (ERR) analysis using the Capital Asset Pricing Model (CAPM) Calculate the RRR using the CAPM model and the stocks’ Betas Use the current yield to maturity on short-dated Australian Government bonds as a proxy for the risk free rate since these are viewed to carry the least amount of investment risk (explain what you choose to use and which date the yield was sourced) Assume that the expected market return is 6% Calculate the ERR for this year (ERR1) and next year (ERR2) using the constant growth Dividend Valuation Model (DVM) If you re-arrange the DVM, the ERR = Dividend Yield + Expected Growth Rate Use Yahoo finance to locate Dividend Yield and Expected Growth Rate Trailing annual dividend yield and forward annual dividend yield can be found under Key Statistics

Select two similar companies within the same industry that are listed on the Australian Securities Exchange. Create an industry profile using information websites such as http://www.asx.com.au/,...

Select two similar companies within the same industry that are listed on the Australian Securities Exchange.

Create an industry profile using information websites such as http://www.asx.com.au/, https://au.finance.yahoo.com/, http://www.reuters.com/ and http://www.morningstar.com.au/, including:
1. A discussion of the industry and sector structure
2. A table of market leaders and competitors with a comparison of market capitalisation, net income and P/E (include discussion of table)

An analysis of Beta including a comparison of company, market and sector Betas (available from Morningstar under Key Measures)
1. Discuss also the key drivers behind each company’s Beta (for example, income, debt, dividend policy, diversification or globalisation) and how these key drivers translate into risk

Calculate the correlation coefficient between your companies and the Australian stock market
1. Create a chart displaying the past year daily closing prices of your companies and a relevant Australian market index such as the S&P/ASX300 or All Ordinaries (obtained from Yahoo Finance)
2. Use excel to calculate the correlation coefficients (excel formula =CORREL)
3. Discuss the correlation results and what this relationship could mean if each of the stocks were held in a portfolio

May 25, 2022