Virtual Stock Exchange Project

Virtual Stock Exchange Project
Number of sources: 4
Paper instructions:
Make 3 Stock Purchases, Provide Information about the Purchases, and Calculate and Interpret the Standard Deviation
Please download the Module 3 SLP template (see attached). You will type your answer into this Excel workbook (attached).

1. Purchase 1 and 2: Buy stock in two companies that have returns that are inversely related. In other words, you might choose to buy stock in a company that does well when oil prices rise and one that does poorly when oil prices rise. You must explain this in the spreadsheet in the field “Reason for Buying.”

2. Purchase 3: Buy a stock that has countercyclical returns. In other words, its returns are inversely related to the business cycle.

Explain the reasoning behind your purchases 1 through 3.

3. You will need to include the following information for each stock in this workbook:

Company Name
Ticker Symbol
Reason for Buying

4. In addition to making these purchases and recording the above information, you will need to calculate the mean and standard deviation of the daily stock price for TWO of your required stock purchases for the last year. The historical stock price can be downloaded from finance.yahoo.com. Once you have searched on the company, using the ticker symbol, you can select the “Historical Data” tab:

You will copy and paste this information into the SLP template and calculate the mean and standard deviation for the “Adj Close” price.

Once you have downloaded the data for both stocks, you will answer the following additional questions in the template:

5. Based on the standard deviation alone, can you make any conclusions about the relative risk of the two stocks?

6. Given the risk, what can you say about the relative expected return of the two stocks?

SLP Assignment Expectations

Answer the assignment questions directly.

Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials.

For computational problems, make sure to show your work and explain your steps.

For short answer/short essay questions, make sure to reference your sources of information with both a bibliography and in-text citations.

 

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