Question

In: Finance

Two publicly traded companies are direct competitors. One has a beta of 1 and the other...

Two publicly traded companies are direct competitors. One has a beta of 1 and the other has a beta of 1.2. What is beta and how can I use this information as one component of stock evaluation? Compare the betas of two competing companies (you choose) and share the results and analysis

Solutions

Expert Solution

Answer:

Beta is the measure of systematic risk of a security or a portfolio compared to the market.
If a stock moves more than the market, it will have a beta greater than 1, and on the other hand, if a stock is less than the market, it will have a beta less than 1.
Therefore, a beta of 1 indicates that the stock is in line with the market which means it moves in the same way as the market moves. A beta of 1.2 indicates that the stock moves more than the market which means that the stock is more volatile than the market.
Therefore, on comparing both the betas, it can be said that the company having a beta of 1.2 is more vollatile than that the market as compared to the comapny having a beta of 1.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

In February, Cap Inc. announced that it would split into two independent publicly traded companies: one...
In February, Cap Inc. announced that it would split into two independent publicly traded companies: one comprised of its Old Navy brand, and the second a yet-to-be-named company that includes its other brands like Banana Republic and Athleta. The planned breakup is an acknowledgment of the two chains' diverging fortunes and how much Gap has lost its once-powerful grip on American consumers. For several years, Old Navy has outperformed its sister brands Gap and Banana Republic with its lower price-points...
1. Select two companies from the same industry that are BOTH publicly traded. They need to...
1. Select two companies from the same industry that are BOTH publicly traded. They need to both be traded on the New York Stock Exchange or the NASDAC stock exchange. (DO NOT SELECT CLEARWATER PAPER I USE IT IN MY EXAMPLES) 2.  Upload a screenshot of the Edgar Database files at SEC.GOV that includes the 10-K files that you need to download for EACH Company. (see attached example) 3. Upload a recent article or press release for each company discussing company...
are you able to find direct labor hours of publicly traded companies? if so where would...
are you able to find direct labor hours of publicly traded companies? if so where would i find best buys?
In practice, how to find beta for a publicly-traded stock?
In practice, how to find beta for a publicly-traded stock?
Research publicly traded companies and select two companies in different sectors. Compare the capital structure for...
Research publicly traded companies and select two companies in different sectors. Compare the capital structure for each and explain your conclusions on the similarities and differences. What support can you provide for why each company adheres to their chosen structuring mechanisms?
Research publicly traded companies and select two companies in different sectors. Provide a written comparison of...
Research publicly traded companies and select two companies in different sectors. Provide a written comparison of the capital structure for each. Explain your conclusions on the similarities and differences. What factors can you suggest for why each company adheres to their chosen structuring mechanism?
Ratio Analysis Review and compare the following ratios for both companies: Choose two publicly traded companies...
Ratio Analysis Review and compare the following ratios for both companies: Choose two publicly traded companies in the same industry. Working capital Current ratio Debt ratio Net Profit Margin Review the most recent ear Review the Earning's call for both companies and report your findings to include, but not limited to, results and projections.
Q#1.   Apple, Inc. (AAPL) announced in 2013 a 7-for-1 stock split. Similarly, many other publicly traded companies...
Q#1.   Apple, Inc. (AAPL) announced in 2013 a 7-for-1 stock split. Similarly, many other publicly traded companies have announced stocks splits. Most stock holders as well as some analysts and traders believe that a stock split would definitely benefit current shareholders and raise the firm’s overall market value. You read in chapter 14 that, in theory, a 7:1 split would increase the number of outstanding shares seven fold and cut down the post-split stock price to 1/7 of pre-split price, thus...
Pick two publicly traded companies in the same industry and perform ratio analysis on each of...
Pick two publicly traded companies in the same industry and perform ratio analysis on each of the companies for two years. Which company you would purchase stock as an investment for yourself and why using the financial ratios helped in the analysis. Currently reviewing Apple and IBM, struggling with some of the ratio analysis.
Pick two publicly traded companies in the same industry and perform ratio analysis on each of...
Pick two publicly traded companies in the same industry and perform ratio analysis on each of the companies for two years. Write a five plus page paper (not including the ratios, and other analysis tools) on which company you would purchase stock as an investment for yourself and why using the financial ratios helped in the analysis. I need in 3 weeks.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT