For this final mini project, please watch the following video and read the artic
ID: 366929 • Letter: F
Question
For this final mini project, please watch the following video and read the articles that follow. Supplement these with your own readings to gather additional information. Then write a brief report titled "Had we participated in the Snap IPO". Include in your analysis the following: - If you had purchased IPO shares, by how much would the value of your financial investment have changed since then? You decide a reasonable size for your hypothetical investment. Provide supporting figures and calculations. - How risky would your investment have been? Provide supporting graphs and calculations. - What rate of return has the market provided over the same time period? You choose the appropriate index. - How volatile has the market been over the same time period? - If you had created a portfolio of stocks to diversify your risk, and SNAP was one of them, what other stocks would you have included? Create a hypothetical portfolio, along with proportions you would have invested in each stock. This is a group project. Please divide up your responsibilities well, discuss among yourselves, acting as checks & balances before you submit your work, and include all team members' names in your report.
http://www.latimes.com/business/technology/la-fi-tn-snapchat-ipo-pricing-20170216-story.html (Links to an external site.)Links to an external site.
http://www.businessinsider.com/snap-snapchat-ipo-2017-3 (Links to an external site.)Links to an external site.
https://www.nyse.com/quote/XNYS:SNAP (Links to an external site.)Links to an external site.
Explanation / Answer
The offer price per share during the Snap IPO was $17 and the current price is $12.99. So if I had invested and purchased the company’s shares the value of my investment would have fallen. The quantum of fall would be = (17-12.99)/17 = 23.59%.
My investment would have been highly risky as the fall of 23.59% is quite significant and it would have made my portfolio volatile. Over the same time i.e. from March 2017 to mid November 2017 the Dow Jones Industrial Average (DJIA) index changed from 20,611.86 to 23,358.24. This translates into an increase of (23358.24-20611.86)/20611.86 = 13.32%.
During this period, the market has not been volatile; rather it has exhibited a steady uptrend.
To diversify my risks I would include stocks from different industries. Stocks that I will include are GE, Apple, Microsoft, Johnson and Johnson, Procter and Gamble, and Bank of America. These stocks belongs to different industries and few of them like P&G and J&J are defensive plays as well and will hold the portfolio steady during the bearish market.
The hypothetical portfolio is provided below:
Stock Percentage of total investment Snap 8.00% GE 15.00% Apple 11.00% Microsoft 14.00% P&G 16.00% J&J 17.00% Bank of America 19.00% Total 100.00%Related Questions
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