California State University FIN 605 Corporate Finance Assignment

This corporate finance assignment presents a detailed analysis of a stock portfolio created in Stocktrak, encompassing a wide range of assets, including stocks and ETFs. The assignment includes answers to multiple-choice questions, calculations of sustainable growth rates for BlackRock Inc., and an overview of the portfolio's performance, including its opening and closing values, profit/loss percentages, and current weights of individual stocks such as Costco Wholesale Corporation, Direxion Shares ETF Trust, United Continental Holdings Inc, ViacomCBS Inc., and Wynn Resorts Ltd. It also details the trades executed, including buying and selling of Alphabet Inc. and The Boeing Company, along with the rationale behind these decisions, considering factors such as the COVID-19 pandemic, global recession, and market trends. Furthermore, the assignment provides technical and fundamental analyses of Alphabet Inc. and The Boeing Company, supporting the trading actions taken, and references to external sources like Financials.morningstar.com, The Motley Fool, Investor's Business Daily, and Yahoo Finance.

Corporate Finance Assignment
Name of the Student
Name of the University

Table of Contents
Answer to Question One..................................................................................................................3
Answer to Question two..................................................................................................................3
Answer to Question three................................................................................................................4
Portfolio Overview..........................................................................................................................4
Stocks Analysis............................................................................................................................5
Portfolio Analysis........................................................................................................................5
Trades Executed...........................................................................................................................6
Sell Side Transactions:............................................................................................................7
References......................................................................................................................................10

Answer to Question One
1 a
2 b
3 d
4 c
5 d
6 d
7 d
8 c
9 d
10 b
11 b
12 c
13 d
14 c
Answer to Question two
Particulars Amount Formula

Payout Ratio 50.3%
Return on Equity 13.58%
Plowback Ratio 49.7% 1-Payout Ratio
Sustainable Growth
Rate
6.7% (1-Payout Ratio)*Return on
Equity
The company that has been selected is BlackRock Inc. The Return on Equity provided by
the company was 13.58% while the Payout ratio provided by the company was 50.3%
(Financials.morningstar.com 2020). These were then used to calculate the Sustainable growth
rate of the company. The result obtained above suggests that the company can safely grow at a
rate of 6.7% with the use of the current resources available with it without any additional debts
or funds required from outside to fund its growth.
Answer to Question three
Portfolio Overview
The portfolio that has been specifically made in the Stocktrak Portfolio includes a wide
range of assets from stocks to ETF. The market value of the long position was calculated to be
around $487,530 and the same has been well determined with the help of the current portfolio
weights that are given to the stocks that are included in the portfolio. The trade analysis has been
specifically performed by taking the trade actions which were performed in the StockTrack
Platform and this has been specifically carried out given the market views, industry and macro-

economic factors. In order to well account the spread of COVID-19 which have widely disrupted
the global financial markets and have pushed the global economy into a recession we have tried
to well select the stocks which can well help the investors generate a sufficient amount of wealth
for the time period analysed.
Stocks Analysis
The stocks which are currently included in the portfolio well comprises of stocks
including Costco Wholesale Corporation, Direxion Shares ETF Trust, United Continental
Holdings Inc, ViacomCBS Inc. and Wynn Resorts Ltd. It is important to note that the trading of
the stocks has been well done while keeping certain important factors which can materially
influence the value of portfolio as shown below:
 Global Recession due to COVID-19 Pandemic.
 Falling Interest Rate
 Slowdown in Business Activities
 Fall in the expenditure pattern
Portfolio Analysis
The analysis of the portfolio can be well done based on the changes that have been
observed in the investment value in the trading period analyzed. The portfolio opening value was
around $546,198 which fell down to around $487,830 reflecting a loss of about -10.69%.
The current weightage of the portfolio has been well shown has been well analyzed based on
investment value and the current market value of the portfolio.
Symb
ol Description
Quanti
ty
LastPri
ce
PricePai
d
Investme
nt
ProfitLo
ss
MarketVal
ue Weights
ProfitLossPercent
age
COST Costco Wholesale
Corporation
800 288.65 300.260
3
240208 -
9,288.2
230920 47.34% -3.87%

5
FAS Direxion Shares ETF Trust 2000 19.17 24.21 48420
-
10,080.
00 38340 7.86% -20.82%
UAL
United Continental
Holdings Inc. 2000 22.885 29.89 59780
-
14,010.
00 45770 9.38% -23.44%
VIAC ViacomCBS Inc. 10000 12.43 13.8 138000
-
13,700.
00 124300 25.48% -9.93%
WYN
N Wynn Resorts Limited 1000 48.5 59.79 59790
-
11,290.
00 48500 9.94% -18.88%
546198 Total 487830 100.00%
47%
8%
9%
25%
10%
Portfolio Allocation
Costco Wholesale
Corporation
Direxion Shares ETF Trust
United Continental
Holdings Inc.
ViacomCBS Inc.
Trades Executed
The trades that were performed in the Stocktrak platform has been specifically carried out
with the help of various news events driven strategies, along with fundamental value and
corporate theories that can well support the investment that is done in the stock.
Trade Action Summary
Action Stock Quantity Asset Price Amt ($)
Buy Alphabet Inc. 10 Equities 1,103.89 11038.90

Buy Alphabet Inc. 15 Equities 1,123.60 16854.00
Buy Alphabet Inc. 85 Equities 1,125.38 95657.30
Investment Value 123550.2
Sell Alphabet Inc. 10 Equities 1,138.31 11383.1
Sell Alphabet Inc. 100 Equities 1,141.00 114100
Recovered Value 125483.1
Profit/Loss from Alphabet Inc. 1932.9
Buy
The Boeing
Company 1000 Equities 144.2 144200
Sell
The Boeing
Company 1000 Equities 152.75 152750
Profit/Loss 8550.00
Sell Side Transactions:
Alphabet Incorporation:
 Technical Analysis: After the COVID-19 driven market sell-off, the stock of Google has
dropped below its 200-Day Moving Average on 9th March. The stock is currently near
about 27% low from its all-time high.
 Fundamental Analysis: From a business perspective the main source of revenue for the
Google Company comes from Digital Advertisement, which would be seeing a sharp fall
as companies and organization would not be spending high on their expenses due to
slowdown in the business activities. The same has been well accounted by the analyst and
an Sell Recommendation has been issued (KRAUSE 2020).

 Action Taken: On 31/03/2020 we have sold 100 shares of Alphabet Incorporation
following the news and analysis that has been carried on for the stock. In total of 110
shares at different prices and sold the same on 30th and 31st making a total profit of about
$123,550.20.
Boeing Company: The Boeing Company as an American Multinational Company designs,
manufactures and sells various Airplanes, Rockets, Aircrafts and other Aerospace Equipment’s.
Technical Analysis: The analysis for the stock well shows that the company has well breached
the 200 day moving average and the stock has almost trading on its low level.
Fundamental Analysis: The share price of the Boeing Company has well fallen down to all the
way to $95 per share showing an amazing loss of about 66%. However, in the last week we also
saw the share reclaiming about 70% of its total value. The key reason for such a volatility was
particularly due to the slowdown in the business operations and reduction of its business
activities by almost 50%.

Action Taken: The Boeing Company operations has also been affected due to economic
slowdown along with that the huge volatility and drop down of the share price below the justified
level was the key reason why we purchased 1000 stock on 30th March at $144.20 and sold the
same on 31st March at $152.70, making a profit of $8550.

References
Financials.morningstar.com. (2020). Growth, Profitability, and Financial Ratios for BlackRock
Inc (BLK) from Morningstar.com. [online] Available at:
https://financials.morningstar.com/ratios/r.html?t=0P000000T6&culture=en&platform=sal
[Accessed 6 Apr. 2020].
Healy, W. 2020. Why Alphabet Investors Should Prepare for Falling Profits | The Motley
Fool, The Motley Fool. Available at: https://www.fool.com/investing/2020/04/02/why-alphabet-
investors-should-prepare-for-falling.aspx (Accessed: 6 April 2020).
KRAUSE, R. 2020. Google Stock: Is It A Buy Right Now? Here's What Earnings, GOOGL
Stock Chart Show | Investor's Business Daily, Investor's Business Daily. Available at:
https://www.investors.com/news/technology/google-stock-buy-now/ (Accessed: 6 April 2020).
Yahoo Finance 2020. Available at: https://finance.yahoo.com/news/challenging-times-ahead-
boeing-stock-232034793.html (Accessed: 6 April 2020).