Group Assignment Cost Of Capital
CORPORATE FINANCE
BWFM5013
Group Assignment
Select 5 listed companies from a business sector and prepare a report on Corporate Financial Analysis.
Project Help Manual
This lists some of the questions that may help you to come up in the context of the project. Please take note that you are not required to answer all questions.
To understand the relationship between managers and stockholders, try answering the following questions. Note that you may not have the information to answer every question, but try to keep your focus on the big questions.
If the firm has been a recent target of social criticism, how has it III. Risk and Return
To understand the risk profile of the company, estimate risk parameters and the hurdle rates for the firm, try answering the following questions:
1. Estimating Historical Risk Parameters (Betas)
1. Comparing to Sector Betas
Run a regression of returns on your firm's stock against returns on a market index, preferably using monthly data and 5 years of observations (or)
What is the intercept of the regression? What does it tell you about the performance of this company's stock during the period of the regression?
What is the slope of the regression?
What does it tell you about the risk of the stock?
How precise is this estimate of risk? (Provide a range for the estimate.)
What portion of this firm's risk can be attributed to market factors? What portion to firm-specific factors? Why is this important?
How much of the risk for this firm is due to business factors? How much of it is due to financial leverage?
2. Choosing Between Betas
Using the beta that you have chosen, estimate the expected return on an equity investment in the companies to a short term investor a long term investor
As a manager in this firm, how would you use this expected return?
3. Estimating Default Risk and Cost of Debt
Does it have any recent borrowings? If yes, what interest rate did the company pay on these borrowing?
4. Short-term solvency or liquidity
BWFM5013
Group Assignment
Select 5 listed companies from a business sector and prepare a report on Corporate Financial Analysis.
Project Help Manual
This lists some of the questions that may help you to come up in the context of the project. Please take note that you are not required to answer all questions.
To understand the relationship between managers and stockholders, try answering the following questions. Note that you may not have the information to answer every question, but try to keep your focus on the big questions.
If the firm has been a recent target of social criticism, how has it III. Risk and Return
To understand the risk profile of the company, estimate risk parameters and the hurdle rates for the firm, try answering the following questions:
1. Estimating Historical Risk Parameters (Betas)
1. Comparing to Sector Betas
Run a regression of returns on your firm's stock against returns on a market index, preferably using monthly data and 5 years of observations (or)
What is the intercept of the regression? What does it tell you about the performance of this company's stock during the period of the regression?
What is the slope of the regression?
What does it tell you about the risk of the stock?
How precise is this estimate of risk? (Provide a range for the estimate.)
What portion of this firm's risk can be attributed to market factors? What portion to firm-specific factors? Why is this important?
How much of the risk for this firm is due to business factors? How much of it is due to financial leverage?
2. Choosing Between Betas
Using the beta that you have chosen, estimate the expected return on an equity investment in the companies to a short term investor a long term investor
As a manager in this firm, how would you use this expected return?
3. Estimating Default Risk and Cost of Debt
Does it have any recent borrowings? If yes, what interest rate did the company pay on these borrowing?
4. Short-term solvency or liquidity