Weighting: 20%

Due date: Wednesday 26^th May 11:59pm

After graduating from The University of Sydney, you are hired as an equity analyst by a managed fund called Venture Ltd. Your manager wants to invest in a stock but needs you to do some research and then ultimately make a recommendation about this stock. You will need to prepare a business report that will be submitted to your manager that answers the questions proposed in Sections A – D of this investment brief as well as a final recommendation.

Section A [17 marks]:

1. Select a publicly listed company that is a constituent of the S&P500 index or ASX200 index that has at least 10 years of dividend history. Alternatively, you can choose any publicly listed company with a market cap of over US$100 billion with at least 10 years of dividend history. The selected company cannot be currently listed in the Dow Jones Industrial Average (DJIA). Describe the company that you have chosen, so your manager has a comprehensive understanding of its operations.
2. Find three news articles from the last 4 weeks about your chosen company and briefly summarise each article. Explain how the event(s) detailed in the new articles have affected your company. In addition, find an article related to your chosen company and the COVID-19 pandemic, which could have been published at any time since 2019. Explain whether your company has been impacted and how your company has fared during the COVID-19 pandemic.
3. List the Global Industry Classification Standard (GICS) sector, industry, and sub-industry for your chosen company. List one other public company that is in the same sub-industry as your chosen company and briefly describe its operations. This competitor does not have to be listed in any of the indices above.
4. Present a table of a current “stock quote” with the following characteristics: (1) Current Price (2) Market Cap (3) Beta (4) P/E Ratio (5) EPS (6) Earnings Date (7) Forward Dividend and Yield, and (8) Ex-Dividend Date for both your chosen company and competitor. Define, interpret, and compare each characteristic for your manager.
5. Compare the P/E ratios of your chosen company and the competitor to the average P/E ratio of the industry of your chosen company. Discuss.

Section B [28 marks]:

1. Calculate the annual returns (from January 1^st to December 31^st for each year) for the market index that your chosen company belongs to for the last: (i) 5-year period, (ii) 10- year period, and (iii) 20-year period. Calculate the average annual return and standard deviation of annual returns over these 3 time periods using both the arithmetic and geometric methods. How have these values changed over time? Discuss.
2. List the current Government bond rates of the following maturities: (i) 1-year, (ii) 5-year,

(iii) 10-year, (iv) 20-year, and (v) 30-year. List and graph the 10-year Government bond rate for the last 10 years. How have interest rates changed over this period? Why do you think this has occurred? Do you think interest rates will go up or down in the future? Discuss with references to appropriate academic literature.

1. Calculate the annual returns (from January 1^st to December 31^st for each year) of your chosen company from 2011-2020. Annualise all dividends paid out. Calculate the average annual return and standard deviation of annual returns from 2011-2020 using both the arithmetic and geometric methods. Interpret these numbers for your manager.
2. Calculate a beta of your chosen company returns using the last ten years of annual returns and the standard deviation from the arithmetic method. Compare your calculated beta to the beta in your stock quote. Are these values the same or different? Explain and discuss. Calculate a beta for the subperiod 2011-2018 (pre-COVID-19 pandemic). Compare and discuss the stability of your betas with references to appropriate academic literature.