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Assignment Brief:
As a junior equity analyst, your task is to assist the fund manager in evaluating the share price performance of companies that are publicly listed on the London Stock Exchange. (Select from the list at the end of this assignment brief)
This involves conducting a comprehensive assessment of the various factors that influence stock prices, including financial performance, market trends, economic conditions, competitive landscape, and other relevant variables that may impact investor sentiment and market perception.
To fulfil this task, you are required to select a company from the list provided in the appendix.
Once a company has been chosen, you should undertake a thorough analysis of its share price performance, identifying key drivers and events that have contributed to its historical trends.
Your report should also consider external and internal factors that might have influenced the company’s market performance, such as changes in industry dynamics, macroeconomic shifts, regulatory developments, or company-specific news and financial disclosures.
You are expected to compile your findings into a detailed report of 1500 words (+/- 10%), adhering to the specific guidelines outlined below. Your report should be structured to provide a clear, well-supported analysis that will aid the fund manager in making informed investment decisions.
- Introduction (100 words)
- Stock Selection and Rationale (100 words):
Select a company listed in appendix. Provide a rationale for the stock selection, considering industry trends, market conditions, or any other relevant factors.
- Data Collection and Compilation (100 words):
Collect monthly closing prices of your chosen stock and calculate the monthly changes in prices. Total number of observations should be at least 60. Briefly describe the process of collecting and organising historical stock data.
- Descriptive Statistics and Trend Analysis (200- 300 words):
Calculate and analyse descriptive statistics for the change in stock prices, including mean, median, standard deviation, and any other relevant metrics. Utilise charts to visually represent trends over the selected time period.
- Correlation and Regression Analysis (200- 300 words):
Choose one external factor (e.g. stock index, interest rate, economic data, etc) and examine correlations between the stock`s performance and the factor. Explain the rationale of the external factor chosen.
Conduct regression analysis to model the stock`s performance based on the selected external factors (independent variable). Interpret the result.
- Hypothesis Testing (100-200 words):
Your fund manager expects you to test one of the following:
i) whether the correlation coefficient you estimated in part 5 is statistically significant
ii) whether the average monthly stock price change is above zero.
Perform the hypothesis testing following the steps discussed in class, using a significant level of 5%.
- Discussion and Interpretation (200-300 words):
Discuss the implications of descriptive statistics, trend analysis, correlation, regression, and hypothesis testing results.
- Recommendations and Future Outlook (100-200 words):
Provide actionable recommendations for potential investors based on the analysis.
Discuss potential future trends or events that may impact your selected stock.
- Conclusion (50 words):
Summarise key insights and reflect briefly on the significance of findings.
- References
You must use the two suggested books (see moodle and handbook):
Barrow, M 2017, Statistics for Economics, Accounting and Business Studies, Pearson Education, Limited, Harlow.
(https://ebookcentral.proquest.com/lib/gre/detail.action?docID=5186281)
Groebner, D, Shannon, P, & Fry, P 2018, Business Statistics, Global Edition, Pearson Education, Limited, Harlow.
(https://ebookcentral.proquest.com/lib/gre/detail.action?docID=5186156).
You can use the selected company’s website and published financial reports.Any additional academic sources must be approved by your tutor. All sources of material used must be properly referenced. Use Harvard referencing. Minimum 5 sources should be used and maximum 7.
- Appendix:
Include an appendix with screenshots of MS Excel files used for analysis.
Ensure proper organisation, clear labels, and comments within the spreadsheet.
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