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The assessment for BE313 is by this coursework and a Final Examination. This piece of coursework is worth 30% of the overall assessment of BE313. The requirements for this coursework are as follows:
1. The coursework consists of data manipulation, analysis and interpretation. Although you may discuss the project with others, the coursework must be written up individually. You may receive reduced or no marks if there are strong similarities between the work handed in by two or more people.
2. All questions are to be answered.
3. The total word count must be printed on the front page.
4. The work must be tidy and answers clearly stated.
5. You must present all relevant details and show clearly how results were obtained. For instance, if you calculate returns like this then you need to specify what Pt and Pt-1 are, and provide an example based on your data.
6. An equation editor must be used to type equations. 
7. This must be your own work. The University may employ software to check for any evidence of plagiarism (please see below for more information on plagiarism). 
8. You may include references if it is appropriate to do so. References are not included in the word count.
9. The assignment must be word processed, font Times New Roman or Arial, with a font size of 12 and with lines double-spaced. All work should be spell-checked and read carefully for typos before handing in.
10. Check that you have answered the question that is asked and that your response provides a logical reasoned answer.
11. The bibliography should contain only those sources you have referenced in your assignment. This does not mean that you should include all books/journals/websites you have read to research your assignment.

Overview of BE313 Coursework

The stock prices of Samsung, Apple and Google since September 27, 2018 are provided below to understand the fluctuations that have taken place in the share prices of the respective companies over the last 22 trading days. The table below shall be helpful in assessing the return during the period between 27th September, 2018 and 30th October, 2018.   

Date

Samsung

Apple

Google

27-09-18

47500

227.26

1208.53

28-09-18

46450

229.28

1207.64

01-10-18

46350

232.07

1211.53

02-10-18

45700

227.99

1177.07

04-10-18

44700

224.29

1167.83

05-10-18

44700

223.77

1155.92

08-10-18

44950

226.87

1145.17

10-10-18

45300

216.36

1092.16

11-10-18

43100

214.45

1090.74

12-10-18

44000

222.11

1120.54

15-10-18

43800

217.36

1102.44

16-10-18

43600

222.15

1133.08

17-10-18

44150

221.19

1127.59

18-10-18

44050

216.02

1097.91

19-10-18

43900

219.31

1105.18

22-10-18

43550

220.65

1111.37

23-10-18

43050

222.73

1114.91

24-10-18

42550

215.09

1057.12

25-10-18

41000

219.8

1103.59

26-10-18

41000

216.3

1083.75

29-10-18

41400

212.24

1034.73

30-10-18

42350

213.3

1049.51

The above information shows the fluctuation in market prices of the shares of the above three companies. Initial looks make it clear that except Apple Inc. other two companies, i.e. Google and Samsung both have experienced decline in share prices. The decrease in market value of shares of Samsung is quite significant.

Rate of return calculated in the table below for the three companies have considered the fluctuations in prices of respective shares of the companies on each day since 27th September, 2018 to 30th October 2018.  

Samsung

Apple

Google

Date

Price

Return (%)

Price

Return (%)

Price

Return (%)

27-09-18

47500

0.21097

227.26

0.673341

1208.53

0.120125

28-09-18

46450

-2.21053

229.28

0.88885

1207.64

-0.07364

01-10-18

46350

-0.21529

232.07

1.216853

1211.53

0.322116

02-10-18

45700

-1.40237

227.99

-1.75809

1177.07

-2.84434

04-10-18

44700

-2.18818

224.29

-1.62288

1167.83

-0.785

05-10-18

44700

0

223.77

-0.23184

1155.92

-1.01984

08-10-18

44950

0.559284

226.87

1.385351

1145.17

-0.93

10-10-18

45300

0.778643

216.36

-4.63261

1092.16

-4.62901

11-10-18

43100

-4.85651

214.45

-0.88279

1090.74

-0.13002

12-10-18

44000

2.088167

222.11

3.571928

1120.54

2.73209

15-10-18

43800

-0.45455

217.36

-2.13858

1102.44

-1.61529

16-10-18

43600

-0.45662

222.15

2.203717

1133.08

2.77929

17-10-18

44150

1.261468

221.19

-0.43214

1127.59

-0.48452

18-10-18

44050

-0.2265

216.02

-2.33736

1097.91

-2.63216

19-10-18

43900

-0.34052

219.31

1.523007

1105.18

0.662167

22-10-18

43550

-0.79727

220.65

0.611007

1111.37

0.56009

23-10-18

43050

-1.14811

222.73

0.942669

1114.91

0.318526

24-10-18

42550

-1.16144

215.09

-3.43016

1057.12

-5.18338

25-10-18

41000

-3.64277

219.8

2.189781

1103.59

4.395906

26-10-18

41000

0

216.3

-1.59236

1083.75

-1.79777

29-10-18

41400

0.97561

212.24

-1.87702

1034.73

-4.52318

30-10-18

42350

2.294686

213.3

0.499435

1049.51

1.428392

The return calculated from share prices of the company, i.e. by subtracting the opening price of the share from its closing price in a day shows that except Apple the other two companies have significant decline in the share prices in the above period. Though the time between 27 September 2018 and 30 October 2018 is very small for calculation of return on the basis of movement in share prices of any company however, this certainly provides a starting point to the existing as well as future investors to identify the shares of a company or companies to hold on to or invest in the future.     

Calculation of average return and variance are provided below:

Samsung

Apple

Google

Total return

  (5,100.0000)

    (8.4000)

  (117.9500)

Total return (%)

        (10.7368)

    (3.6962)

       (9.7598)

Average return each days (Total return /33) %

          (0.4880)

    (0.1680)

       (0.4436)

Variance of return

2.520454842

3.893743

5.89070127

From the above table it is clearly visible that out of the above three stocks, i.e. Apple, Samsung and Google, variance in rate of return is highest for Google with 5.89. In comparison both Samsung and Apple have provided stable return to the shareholders with variance of 2.52 and 3.89 respectively. Thus, the return on the shares of Google is most vulnerable to changes. During the above period Samsung end up losing significant value of its share in the stock market. The shares of the company has suffered most degradation in market value over the 22 days period with a loss of 10.74% in the value of the shares. Google has also lost around 9.76% in the value of its shares in last 22 days. Average return of Samsung as well as Google are in negative indicative of declining share prices of these companies between 27th September, 2018 and 30th October, 2018.     

It is clear from the average return in the last 22 days as well as the variance in average return that Apple has dominated the other companies as the loss in share value of the company has been lowest out of three companies with loss of 3.70% in the share prices of the company in the above period. Other two companies, namely Samsung and Google have lost significant value of the shares over this period.  

Variance covariance matrix between Samsung and Apple

0.067886

Variance covariance matrix between Samsung and Google

-0.09347

Variance covariance matrix between Apple and Google

0.897327

Part a:

Apple and Google have highest correlation coefficient.

Combinations

Weight Apple

Weight Google

Return

Standard deviation

1

0.4

0.6

0.095547

0.008944

2

0.6

0.4

0.05977

0.008944

3

0.5

0.5

-0.00049

0.039075

4

0.3

0.7

0.113436

0.017888

5

0.7

0.3

0.041882

0.017888

6

0.8

0.2

0.023993

0.065662

7

0.9

0.1

0.006105

0.074606

8

1

0

-0.01178

0.08355

9

0.2

0.8

0.131324

0.011997

Part b:

Apple and Samsung have lowest correlation coefficient.

Combinations

Weight Samsung  

Weight Apple

Return

Standard deviation

1

0.4

0.6

0.081552

0.001947

2

0.6

0.4

0.12822

0.025281

3

0.5

0.5

0.104886

0.013614

4

0.3

0.7

0.058218

0.00972

5

0.7

0.3

0.151554

0.036947

6

0.8

0.2

0.174887

0.009785

7

0.9

0.1

0.198221

0.046668

8

1

0

0.221555

0.033119

9

0.2

0.8

0.034884

0.060217

The MEF on the basis of highest coefficient stocks.   

The MEF below is on the basis of two lowest coefficient stocks.

Part a:

The reason that Apple Inc. shall be preferred over Google and Samsung because it the loss in share price is minimum for the company as compared to the other two companies over the 22 days’ period. The shareholders are mainly concerned with the capital appreciation thus, higher the return the better it is for the shareholders.

The relevance of investors’ preference in selection of optimum portfolio for the investors is of huge significance. The risk preference of an investor is key to the determination of the investment options to be chosen for the person. In this case Apple has been the company with least and very insignificant loss in share price thus, the shareholders will prefer the shares of the company out of the three companies.

Part b:

Given an option an investor will not invest in any portfolio or individual stock out of the three companies as the return in all these companies have been negative over the 22 days period. All three companies have experienced decline in the share prices of the company in the last 22 days period.  

It is clear from the share price movements of the three companies that it would be better to choose an individual stock, i.e. Apple over the portfolio involving any one or other two companies as both have not performed well during the period. Thus, only Apple shall be chosen as the expected loss would be minimum for the investors by investing in Apple. Thus, as per the return on investment portfolio theory Apple shall be chosen to minimize the loss on investment.

Part a:

The possibility of borrowing and lending at risk free rate and MEF is mainly dependent on the economic condition of a country. In case the capital is freely available in the market then the lending and borrowing shall take place using risk free rate of interest. MEF on the other hand shall be used for lending and borrowing when there will be scarcity of capital and the capital is not freely available in the market.  

Part b:

Yes, as in that case the investors would prefer investing in risk free assets instead of a stock. Thus, if there is an option available to the investors to invest in risk free assets then they would obviously use that option instead of investing on shares of different companies and other risky investments. The investors have primarily one objective and it is to maximize the return on investment at a specific rate of risk on such investment. Given an option to invest ion risk free assets investors would always chose such option over and above any other option that contains even a slightest of risk.

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My Assignment Help. (2021). BE313 Coursework Analysis And Interpretation Essay.. Retrieved from https://myassignmenthelp.com/free-samples/be313-portfolio-analysis/accounting-and-finance.html.

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My Assignment Help (2021) BE313 Coursework Analysis And Interpretation Essay. [Online]. Available from: https://myassignmenthelp.com/free-samples/be313-portfolio-analysis/accounting-and-finance.html
[Accessed 05 March 2024].

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