In this exercise you have to invest in 3 firms selected
A) Consumer Discretionary Sector (Automobile)
B) Consumer Staples Sector (Tobacco)
C) Financial Sector
Invest $10,000,000 of a special portfolio of both "stocks" and "bonds" evenly. The objective of the portfolio is to produce superior returns to those of the S&P 500 over the next 12 months.
Therefore, given the economic environment, the sector sensitivity and performance expected, 3 firms will need to be selected per industry that will outperform their sector.
Requirements :
1) Select stocks and bonds to purchase based on sector and industry analysis
2) Use 3 methods to calculate the relative value of stocks: dividend discount, Gordon model, and P/E or other approved method.
3) Obtain the consensus earnings forecast for the firms
4) Obtain a consensus interest rate forecast