COURSE PROJECT You will complete a course project in BUS 208 with the company you were assigned in BUS 207. Keep in mind: follow the Excel formatting template also included in this folder. You can format the cells to your liking as long as each part of the project fits on one page when printed. Everything must be typed (nothing handwritten). Refer to the grading rubric that is included in this folder in Canvas so that you do not miss anything. Part 1 and Part 2 – DUE NOVEMBER 11 Part 1 • You should begin to collect the adjusted closing stock price of the company on a daily basis for an eight week period. Pick any consecutive eight week period (I would suggest the most recent eight week period). You will have 40 prices. Format so that all stock prices fit on one page in your spreadsheet. • Do the same (i.e., collect adjusted stock prices for the same 40-day period) for the market. I would suggest using the S&P 500, which can be found on Yahoo Finance using the ticker ^GSPC. • Using the prices, calculate the daily holding period returns for your stock (stock returns) and for the market (market returns). Be sure to show the calculation for at least one date. • In Excel, use the chart function to create a table showing the stock price movements over time. You only need to graph your company’s stock price over time (not the market). Observe from the chart any significant peaks and valleys in price. Clearly label your graph (dates on the x-axis, prices on the y-axis. Include a title). • Find at least 2 news articles during the time period of your stock price collection and explain how the news events described in the articles impact the observed movements in share price. The articles should reference your company specifically. You need to point out exactly where on your graph you think the news impacted the stock price. They must be from valid news sources—not press releases, analyst opinions, blogs, etc. Use only news from actual publications such as the Wall Street Journal, New York Times, or other newspapers or business magazines. Most general information finance websites will not work here (like Investopedia) or analyst opinion pieces (Motley Fool, Seeking Alpha). You need to include hard copies of these articles with your final project (the actual articles, not website links). • Everything in Part 1 should fit on 1 printed Excel page. Part 2 • You must calculate the required rate of return for your stock. To do this, you will use the capital asset pricing model. This process is covered in detail in class. You will need several pieces of publicly available information – risk free rate, company’s beta, and the rate of return on a selected stock index. To calculate the required rate of return for your assigned company, follow the instructions below. • Calculate the beta for your company. To do this, use the daily holding period returns that you calculated in Part 1 (pull the prices and return data over to the Part 2 spreadsheet where highlighted). Graph these returns on a scatter plot (market returns on the x-axis and your company’s returns on the y-axis). Insert a linear trend line (the characteristic line) with the equation into the graph. Beta is the slope of this line. Be sure to include this graph and the accompanying characteristic line. Label axes. What does beta indicate about your company’s return versus market returns? Explain. • Find the most recent return on a 10-year Treasury security. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/ (or elsewhere). This is in percent! • Assume that the market risk premium is 7.06%. This is according to the most recent Damodaran estimates (http://pages.stern.nyu.edu/~adamodar/). • What is a reasonable required rate of return for your company? Explain your results and show all calculations. • Please document all of the sources for each piece of data (including beta, risk-free rate, and market risk premium), including web addresses and dates. • Everything in Part 2 should fit on 1 printed Excel page. Part 3 and Part 4 – DUE DECEMBER 9 Part 3 • Find each financial ratio as listed in the Excel template and use the previous year’s ratio for comparison. • You can use S&P Net Advantage, Yahoo Finance, Google Finance, or other sources to find (or calculate) each ratio. • Interpret each ratio and compare across years. Identify if this represents a strength or weakness for each ratio (compare to previous year or to the industry). • Explanations should include some insight as to why the ratio increased or decreased or stayed the same. It should be detailed – in other words, do not simply say “it went up” or “the number decreased,” but rather “the reason that the ratio represents a strength is because the firm is now collecting receivables faster due to having reduced accounts receivable and increased sales…” (for example.) • For the Value Creation ratios, you can compare the current ratios for your company with a competitor or industry average (rather than comparing to the year before). • Document sources of information used in this section. All citations must be specific enough so that I am able to locate the information footnoted. Include hard copies of the financial statements. • Everything in Part 3 should fit on 1 printed Excel page. Part 4 • Summarize findings and make a statement about value creation. Specifically, is your company creating value for shareholders? Support your statement with relevant ratios, stock price movements, and news events. This statement is separate from your statements in Part 3 regarding each financial ratio category. This should be fairly detailed and consist of several paragraphs. Note that this is not a summary of your project but instead a specific question as to whether you think your firm is creating value and why. You should base your answer on all three parts of the project up to this point. Please be unambiguous in your answer. This should be done in a Word document.