Finance Assignment: Company Analysis, Valuation, and Beta

This assignment focuses on stock valuation, company analysis, and the calculation of beta. It requires students to create a hypothetical company and answer questions related to stock valuation, bond valuation, cost of capital, and capital budgeting. Additionally, students are tasked with analyzing the financial performance of Ford Motor Company and Tesla, Inc. using data from Yahoo Finance. The assignment involves calculating betas, analyzing historical stock prices to determine returns and risk, and performing ratio analysis. The goal is to compare the financial performance of the two companies and interpret the results to make informed investment decisions. The assignment aims to integrate the concepts of financial analysis and valuation techniques, providing a comprehensive understanding of financial markets and investment strategies. This assignment is available on Desklib, a platform offering AI-based study tools, past papers, and solved assignments for students.

1. Create your own hypothetical company and mini case. You should provide necessary
information on the company first, then list questions and their answers covering the following
topics.
 Stock Valuation
 Bond valuation
 Cost of capital
 Capital Budgeting
You will be graded based on the difficulty level of the questions (and the correctness of your
answers) you have formulated and the interrelationships you have covered between the topics
with your questions. You do not need to cover every detail but the essential points regarding
each topic. The number of questions to be prepared is up to you.
2. Based on the information on the two nonfinancial companies assigned to you ( Ford Motor
Company and Tesla, Inc) from YahooFinance website at https://finance.yahoo.com/most-active,
answer the following questions.
a. What are the betas of these companies as calculated by YahooFinance and presented in
the “Summary section”? How should be the beta values of these companies be
interpreted?
b. Go to “Historical Data” section and download the weekly historical prices for 2018.
Calculate the return for these stocks by using the 2018 weekly stock price information.
c. Calculate the risk of the stocks of these companies by using the 2018 weekly stock price
information.
d. Based on your calculations above decide which company stock was a better investment in
2018. Explain why.
e. Go to the “Financials” section and based on the information provided do a ratio analysis
for both companies. Limit your analysis to the ratios that can be calculated with available
information. Compare the companies’ financial performance comparatively, interpret the
ratios you have calculated. You can also get more insight by checking the “Profile” section.