FINA501: Your team is planning to invest in the four of the NZX10 stocks. Your team has $100,000 to fully invest: Finance Assignment, AUT, NZ

Question One: Mini Research - Portfolio beta and expected return

Your team is planning to invest in the four of the NZX10 stocks. Your team has $100,000 to fully invest in these four stocks and has decided to allocate the funds equally in these four assets.

⦁  As a group, all team members shall discuss and decide which four of the NZX10 companies to study.  State the names of these companies and provide the reason(s) for choosing them; you can make the assumption(s) if needed.  [Note: the reason(s) must be related to finance and/or business concepts or theory.  Word limit: 80 words; answers beyond the word limit will not be marked.]

⦁  Search for the beta for each of the selected companies and fill in the details in the table below.  Clearly state the data source and link.

⦁   Use CAPM to calculate the expected return for each asset.  Assume a risk-free rate of 4% and an expected market return of 10%. Clearly display the formula as well as relevant values and final answer for each asset.  Express final answers in two decimal places.

⦁   Calculate the expected return on this portfolio.  Clearly display the formula, relevant values for each asset and the final answer. Express final answer in two decimal places.

⦁   Compare your answers in parts (c) and (d) with the market expected return and market beta. State whether this portfolio has more or less systematic risk than the market.   Use relevant figures to support your answer.