Financial Analysis Assignment - (Solved)

   

Added on  2020-05-11

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Running Header: FINANCIAL ANALYSIS1Financial AnalysisStudent's name:Institution:Professor's name:Course:
Financial Analysis Assignment - (Solved)_1
Financial analysis2Question 1Line charts are used to display information as a data point series that are connected by straight line segments (Kumar & Phrommathed, 2005). Line charts can be used to depict the features of time series, thereby, there are referred to as time series graphs when the component of time is included. As a result, time series carts are vital in determining the patterns of a model over a period of time (Enders, 2007). The time series charts to be developed for S&P 500, BA and IBM are needed to describe vital features of the time series pattern, to forecast future series' values, explain how the past impacts the future, and to maybe provide a controlled standard for a variable. The vital characteristics considered in a time series include the trend, long-run cycle, seasonality, outliers, constant variance and abrupt changes (Shumway & Stoffer, 2006).a)S&P 500 Price Figure 1: S&P 500 price time series7/1/201010/1/20101/1/20114/1/20117/1/201110/1/20111/1/20124/1/20127/1/201210/1/20121/1/20134/1/20137/1/201310/1/20131/1/20144/1/20147/1/201410/1/20141/1/20154/1/20157/1/201510/1/201505001000150020002500PS&P
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Financial analysis3From figure 1 it can be seen that the S&P 500 has a trend which is increasing over time. The trend can be observed by the straight line connecting the start point and the end point. However, the trend does not show any seasonality as there are no significant outliers. Other observations that can be made from the time series are that the S&P 500 has no abrupt changes and no period unrelated to seasonality factors. b)Boeing Company (BA) Stock PriceFigure 2: BA stock price time series7/1/201010/1/20101/1/20114/1/20117/1/201110/1/20111/1/20124/1/20127/1/201210/1/20121/1/20134/1/20137/1/201310/1/20131/1/20144/1/20147/1/201410/1/20141/1/20154/1/20157/1/201510/1/2015020406080100120140160PBLike the S&P time series, it can be seen that the trend for Boeing Company is increasing over time. The figure shows that the trend line has outliers. The outliers are values which are far away from the trend line. However, it can be seen that the time series has no abrupt changes, no seasonality or any long-run-cycle. c)International Business Machine (IBM) stock priceFigure 3: IBM stock price time series
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Financial analysis47/1/201010/1/20101/1/20114/1/20117/1/201110/1/20111/1/20124/1/20127/1/201210/1/20121/1/20134/1/20137/1/201310/1/20131/1/20144/1/20147/1/201410/1/20141/1/20154/1/20157/1/201510/1/2015050100150200250PIBFrom figure 3, it is seen that IBM has no trend. Thus, the price of stocks can be seen to rise from 7/1/2010 to1/1/2013. From 1/1/2013, the prices of the stock have been on the decline. Moreover, due to a lack of a trend, the stocks can be seen to have no seasonality (Koopman & Lee, 2009). Thus, there are no regular repeating patterns of high and lows. Conversely, the time series has no abrupt changes, outliers, and long-run cycle.Question 2 a)Calculated return for the three-time series can be observed in the Excel document.b)The summarized statistics for the return series of the sample are shown in the diagram below:Table 1: Returns summary statisticsSummary statisticsS&PBAIBMAverage0.9509471.1574430.106686Variance12.371433.3197422.12779
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