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Part II. Stockholder Analysis
Objective: To find out who the average and marginal investors in the company are. This is relevant because risk and return models in finance assume that the marginal investor is well diversified.
Key Questions:
 • Who is the average investor in this stock? (Individual or pension fund, taxable or taxexempt, small or large, domestic or foreign)
• Who is the marginal investor in this stock?
 Framework for Analysis 本英语毕业论文由英语论文网www.51lunwen.org整理提供
 • Who holds stock in this company?
   • How many stockholders does the company have?
• What percent of the stock is held by institutional investors?
• Does the company have listings in foreign markets? (If you can, estimate the percent of the stock held by non-domestic investors)
 • Insider Holdings
• Who are the insiders in this company? (Besides the managers and directors, anyone with more than 5% is treated as an insider)
• What role do the insiders play in running the company?
• What percent of the stock is held by insiders in the company?
• What percent of the stock is held by employees overall? (Include the holdings by employee pension plans)
• Have insiders been buying or selling stock in this company in the most recent year?
 

 Part III continues
Objectives: To develop a risk profile for your company,estimate its risk parameters, and use these parameters to estmate cost of equity and capital for the firm.
Key questions
a) What is the risk profile of your company? How much overall risk is there in this firm? Where is this risk coming from (market, firm specific?), How is the risk profile changing?
b) What is the performance profile of an investment in this company? What return would you have earned investing in this company’s stock? Would you have under or outperformed the market? How much of the performance can be attributed to management?
c) How risky is this company equity? Why? What is its cost of equity?
d) How risky is this company’s debt? What is its cost of debt?
e) What is the mix of debt and equity used by this firm to fund its investments?
f) What is this company's current cost of capital?

Framework analysis
How to answer a? 1. What are the intercept and slope from your excel regression output as what we did in computer lab, what are R-squared and 1-R-squared from that output? Calculate total beta
– R-squared for example if = 0.29, => 29% is the proportion of risk comes from market sources. The rest 100%-29%=71%, therefore, comes from firm-specific sources
– Slop of the regression (b) or market beta tell you the relation between stock return and the market risk
– Using beta from regression(that looks at only market risk) will tend to under estimate the cost of equity since private owners feel exposed to all risk. Therefore you need to adjust the beta to reflect total risk rather than market risk. This adjustment is a relatively simple one, since the R squared of the regression measures the proportion of the risk that is market risk.

Total risk or total beta = squared R Beta Market
For example if the market beta is 0.82 and the average R-squared of the comparable publicly traded firms is 16%, the total beta=0.82/ 16% =2.06
To answer b? 2. Perf本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。