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Capstone Component 1: Portfolio Research and Analysis Paper
For the first capsto
Capstone Component 1: Portfolio Research and Analysis Paper
For the first capstone component, you will research and analyze a comprehensive financial portfolio composed of at least five securities designed to meet your selected client’s investment needs. (At least one security must be an equity for a publicly traded, U.S.-based global corporation for which you will perform a competitor analysis.) The paper should cover the risk-adjusted return and volatility for each security and for the portfolio as a whole, based on your research and the observed performance of the instruments during the course. You must also provide the rationale for each selection. In addition, provide the projected value of the portfolio at the end of the client’s investment period and the assumptions underlying that projection. Include any tax implications of your suggestions. You should also suggest a reasonable and compliant timeframe in which to review the portfolio in the future and make adjustments as needed given new market conditions.
Remember that to fulfill your fiduciary duties in serving the best interest of your client, your portfolio research and analysis paper will need to be succinct, clear, and well supported throughout by reliable research and credible evidence.
Your paper should include the following sections:
Executive Summary. Provide a brief overview of the key findings and recommendations from your portfolio analysis and research.
Portfolio Analysis. Research and analyze a portfolio of at least five securities using a portfolio strategy (value, growth, etc.) and risk-tolerance level appropriate to the needs and return requirements of your client. For each security in the portfolio, provide a financial analysis covering the associated risk, return, and tax implications. In addition, provide a clear assessment of the strengths, weaknesses, opportunities, and threats of any companies whose stock is included in the portfolio. Assess the alpha, beta, and intrinsic value for each equity security and for the portfolio as a whole based on your analysis. Use the capital asset pricing model (CAPM) to develop the return for each equity security. Provide a well-supported rationale for why each security is included and how it aligns with client objectives, including an assessment of any preferential factors the client might be concerned about such as market share, innovation, and sustainability practices.
Competitive Analysis. Research at least one publicly traded, U.S.-based global company in more depth, comparing its performance and value with a close competitor. (If your portfolio includes more than one company that meets these specifications, select the one you think would be of most interest to the client.) The goal is to analyze investment alternatives with a focus on better serving the client. The competitive analysis must include, but is not limited to, the criteria described below.
Compare key ratios of financial performance and health at the selected company and its peer competitor. Consider, at a minimum, the following measures:
Profitability, including return on equity (ROE) and net profit margin
Liquidity, including the current ratio
Debt management, including the debt-to-equity ratio
Market, including earnings per share and price earnings ratio
You may include other ratios and indicators as appropriate.
Analyze what the key ratios for the two companies suggest about their respective organizational goals and objectives both now and in the future.
Compare newsworthy events (such as salient industry or economic events, policy or political changes, and natural disasters) that have affected (or may affect) one or both companies. Discuss how the events affected (or are likely to affect) strategic goals and financial planning within the two organizations and how that, in turn, may affect investor returns.
Evaluate the alpha and beta for each company’s stock.
Assess the merit of the selected company as an investment in the global context as compared to the peer company selected. In other words, which company is a better investment for the client? Why?
Estimated Return and Value. Estimate the rate of return for the portfolio as a whole and perform a multi-period net present value analysis based on the client’s investment time horizon. Discuss the expected rate of inflation.
Conclusions. Specify any takeaway message for the client based on your research and the securities’ observed performance. Do you stand by your initial selections? Why, or why not? Be transparent about any assumptions you have made, how confident you are in those assumptions, how changes in those assumptions might affect portfolio performance, as well as when it might be appropriate to review the portfolio again to make any needed adjustments.
Your portfolio research and analysis paper (Component 1) should be about 25 pages in length, including visual aids (plus a cover page and references). Use double spacing, 12-point Times New Roman font, and one-inch margins. Calculations should be provided in an appendix, with appropriate references in the body of the analysis. You may also include illustrations, graphs, charts, and other nontextual materials as appropriate to support your analysis.
Client overview is attached
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