Question

Capital markets and the ability to raise funds for corporate uses are essential to the U.S. economic system. For this assignment, imagine that you have $25,000 to invest in U.S. companies. You are buying used stock. The company got the money when it issued the stock originally. You will be buying it from an existing owner. You are investing, or buying, the stock because you believe the company will make money and pay you a dividend in cash. Each share of stock that you buy entitles you to any dividend declared and a vote at the annual stockholders' meeting. The stock also allows you the ability to earn your money back by selling the stock. Of course, investing in stocks is risky and there is the possibility that the stock you buy will be worth less when you want your money back. The company is not obligated to give you any of your money back. You will only get your money back if another investor wants to buy your stock. Instructions Using the above scenario and the resources listed below, complete the following directions for your Week 3 Stock Journal entry: Select three US companies that are publicly traded using your knowledge and experience and make sure you are practicing good diversification. Jim Cramer, Money Manager, on CNBC, plays a game at the end of his show called "Am I Diversified." Check out the short clip, Am I Diversified - Mad Money [Video], to get a sense of industry diversification. Ideas for Sources of Information: There are many ways to find such companies and the stock prices, including the New York Stock Exchange, Google Finance, NASDAQ, and Yahoo! Finance. Describe how you will divide $25,000 across the three companies (e.g. $10,000 in Company 1, $10,000 in Company 2, and $5,000 in Company 3). You decide the amount you are investing in each company. You do not have to provide any analysis to justify your decisions. Provide a reason for picking each company. For example, you might invest in Ford because that company gets a lot of your money and you hear that Ford is doing well, and will continue to do well. Identify the number of shares you are buying, and the price of the shares you are buying for each company. Once you decide the companies and the amount for each company, determine how many shares you can buy. For example, if Company 1 is selling for $42.16, then you may buy $10,000/$42.16, or 237.19 shares. But you cannot buy a part of a share, so you decide to buy either 237 or 238. In this example, you buy 237 shares at $42.16 per share, investing $9,991.92. You won’t be able to buy exactly $10,000, or $5,000, or $25,000, but it will be relatively close. Use at least two quality references. Consider using the sources of information ideas above and/or searching and locating resources from the Strayer University Library. Note: Wikipedia and other websites do not qualify as academic resources. Submit two documents for your journal assignment submission by uploading them to the assignment submission area: Completed Excel template. Completed Word document template with your rationale. Note: This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. The specific course learning outcome associated with this assignment is: Analyze the performance of an investment portfolio over time.

Answer 1

1. (a) 3M [NYSE: MMM]

At this point, most people don’t even remember what 3M stands for. Founded in 1901 and formerly known as the Minnesota Mining and Manufacturing Company, it’s now a huge conglomerate that makes everything from Post-It notes to semiconductors.

This Minneapolis-based company has more than 60,000 products for both businesses and consumers and boasts more than $30 billion in annual revenue. It has also raised its dividend every year for six decades. This company has consistently outperformed the S&P 500 over the last decade.

(b) Honeywell [NYSE: HON]

This company refers to itself as a “software-industrial” conglomerate, but that hardly gives a good sense of the breadth of its businesses. Honeywell employs more than 130,000 people building everything from aircraft wheels to packaging for pharmaceuticals.

The company was founded in 1886 as the maker of the first crude thermostat, and through a series of mergers evolved to become one of the world’s largest aerospace firms. Most of Honeywell’s revenue comes from four segments: Aerospace, home, and building technologies, performance, and materials technology, and safety and productivity solutions. All of these segments have seen steady growth, and the overall company has been a solid stock market performer for decades.

(c) Alphabet [NASDAQ: GOOG]

Alphabet is not just the holding company for the search engine Google, but this company has broadened its revenue base by delving into all things tech and some even not-so-tech. In addition to generating revenue from Internet advertising, it operates the Android operating system and has manufactured phones of its own.

Alphabet has also made money from life sciences and biotechnology was a huge early investor in ridesharing company Uber and has its own driverless car initiative. Its CEO once said that he expects Alphabet to soon have more than two dozen subsidiaries, and that may even be conservative.

2. & 3.

Stock	Amount ($)	Current stock price ($)	No. of shares
3M	9261.0	147	63
Honeywell	7995.7	135.52	59
Alphabet	7659.6	1276.60	6