Question

For the following three stocks Wells Fargo, Bank of America, and Citi. THe benchmark is DJUSFN ( Dow Jones U.S. Financials Index)

1a. Calculate the holding period return for each stock from the viewpoint of an investor who purchased them at the closing price on Monday 3/16/20 and held them until the closing of the market on Wednesday 4/15/2020. If you need to review this calculation, refer to the Week 1 notes. If you had initially invested $10,000 in each of the three stocks, how much would your portfolio be worth at the end of your holding period? 1b. Repeat the calculations in 1a. for your benchmark. (Holding period return and ending value of a $10,000 initial investment.) 2. Discuss reasons for the differences in results for 1a. and 1b. In retrospect, was your benchmark a reasonable one? Why or why not?

Answer 1

Founded in 1896 with 12 stocks, the Dow Jones Industrial Average is one of the oldest stock market indexes. There are 30 Dow Jones stocks designed to serve as a bellwether for the general U.S. stock market. Other major stock indexes include the technology-heavy Nasdaq composite and the S&P 500 index — an index of the 500 largest companies in the United States.

Amid the current coronavirus stock market rally, investors should be focusing on the stocks that are setting up and breaking out. These stocks will have strong relative strength lines, and could be some of the new uptrend's stock market leaders.

Price of the stock on 16.03.2020 were higher as comparared to the holding period ends.