Evaluate the Stock Market Performance

  • This assignment is based on O’Leary Lab 4: Stock Portfolio Analysis and consists of two (2) parts – an Excel-based assignment and a paper.

    You have been assigned to evaluate the stock market performance of firms who manufacture accounting software products. Your evaluation will be based on large- and medium-market firms. The firms are as follows:

    Large-Market Stocks
    • Oracle Software (Oracle Corp: NASDAQ)
    • SAP (SAP AG: NYSE)

    Medium-Market Stocks
    • Microsoft Great Plains (Microsoft: NASDAQ)

    Small-Market Stocks
    • QuickBooks (Intuit: NASDAQ)
    • Peachtree (Sage Grp: LSE)

    Part I: Excel Spreadsheet Assignment

    • Create one (1) Excel workbook that contains each of the four (4) scenarios (detailed below). Use the appropriate Excel formulas and functions to justify your derived results. Note: Follow the completion and submission instructions provided in the table below.

    Scenario 1

    You have been given $5,000,000 to invest the five (5) stocks. You must invest the $5,000,000 accordingly:

    • No more than 35% of your investment will be in the Large-Market Stocks, with a minimum of 15% investment in any given stock
    • No more than 30% of your investments will be in the Medium-Market Stock, with a minimum of 15% investment in the stock
    • No more than 35% of your investment will be in the Small-Market Stocks, with a minimum of 15% investment in any given stock

    The purchase date of the stock will be six (6) months ago. Track your stocks’ daily performance for the 120 trading days following the purchase date. During this time, you will note the gains and losses each day. At the end of the 120 days’ tracking period, calculate your net gain (or loss) for each stock and your total investment at the end of the 120 days. Develop the appropriate charts that highlight your performance. You will create a minimum of two (2) charts.

    Note: Your purchase must be in whole shares. For example, you cannot purchase 100.5 shares. You must purchase either 100 or 101 shares. For this reason, you may not total to exactly $5,000,000, but you will come close.

    Scenario 2

    You are now skeptical of the Medium-Market stock. With that, you will now invest your $5,000,000 accordingly:

    • No more than 50% of your investment will be in the Large-Market Stocks, with a minimum of 20% investment in any given stock
    • No more than 50% of your investment will be in the Small-Market Stocks, with a minimum of 20% investment in any given stock

    The purchase date of the stock will be six (6) months ago. Track your stocks’ daily performance for the 120 trading days following the purchase date. During this time, you will note the gains and losses each day. At the end of the 120 days’ tracking period, calculate your net gain (or loss) for each stock and your total investment at the end of the 120 days. Develop the appropriate charts that highlight your performance. You will create a minimum of two (2) charts.

    Note: Your purchase must be in whole shares. For example, you cannot purchase 100.5 shares. You must purchase either 100 or 101 shares. For this reason, you may not total to exactly $5,000,000, but you will come close.

    Scenario 3

    You are now skeptical of the Large-Market Stock. With that, you will now invest your $5,000,000 accordingly:

    • No more than 50% of your investment will be in the Medium-Market Stock, with a minimum 20% investment here
    • No more than 50% of your investment will be in the Small-Market Stocks, with a minimum 20% investment here

    The purchase date of the stock will be six (6) months ago. Track your stocks’ daily performance for the 120 trading days following the purchase date. During this time, you will note the gains and losses each day. At the end of the 120 days’ tracking period, calculate your net gain (or loss) for each stock and your total investment at the end of the 120 days. Develop the appropriate charts that highlight your performance. You will create a minimum of two (2) charts.

    Note: Your purchase must be in whole shares. For example, you cannot purchase 100.5 shares. You must purchase either 100 or 101 shares. For this reason, you may not total to exactly $5,000,000, but you will come close.

    Scenario 4

    You are now a believer of only the Medium Market Stock. With that, you will now invest your $5,000,000 into that stock.
    The purchase date of the stock will be six (6) months ago. Track your stocks’ daily performance for the 120 trading days following the purchase date. During this time, you will note the gains and losses each day. At the end of the 120 days’ tracking period, calculate your net gain (or loss) for the stock and your total investment at the end of the 120 days. Develop the appropriate charts that highlight your performance. You will create a minimum of two (2) charts.

    Note: Your purchase must be in whole shares. For example, you cannot purchase 100.5 shares. You must purchase either 100 or 101 shares. For this reason, you may not total to exactly $1,000,000, but you will come close.

    Note

    Do not worry about any commission fees or miscellaneous charges.

    Assignment

    Determine how much money you earned or lost with each stock on a daily basis.

    Instructions on how to complete

    There is no sample Excel workbook to use as part of the project; therefore, you will create your own workbook. In creating your workbook, be sure to include the following data (however, other data will be stored in your scenario) in a columnar format. 

    • Stock name
    • Stock symbol
    • Number of shares purchased / acquired
    • Stock price
    • Date of stock transaction

    Start your scenario using the opening-day price for each stock as your purchase price and use the closing stock price to calculate how much money you earned or lost each day.

    At the end of your scenario, calculate the following for each stock in question.

    • The highest stock price for the period for the stock(s) selected
    • The lowest stock price for the period for the stock(s) selected
    • The average stock price for the period for the stock(s) selected
    • The largest amount of profit (loss) earned for the period for the stock(s) selected
    • The lowest amount of profit (loss) earned for the period for the stock(s) selected

    Track the stock for 120 consecutive days that the market is open.

    Submit

    One Excel workbook that contains each of the four (4) scenarios. You will need to use the appropriate Excel formulas and functions which will show the instructor how you derived your results.

    Part II: Paper

    • Write a three to four (3-4) page paper in which you:
    • Summarize the various accounting systems that each firm provides. Be sure to address the following for each firm:
      • The various types of accounting systems it sells (e.g., Oracle sells Oracle Financials as well as PeopleSoft financials)
      • The industries that it markets itself to (e.g., most firms sell their products to banking firms, construction firms)
      • Strengths and weaknesses of the products sold by the firm as noted by reviewers of the products.
      • Whether Wall Street views this company in a positive or negative way. Explain why.
    • Summarize your findings from each scenario, emphasizing your decisions on which stocks were used and the criteria for determining the number of stocks used. Suggest a strategy to improve your selection of courses.
    • Describe an ideal scenario that would have exceeded the results from your best scenario in Part 1 of the assignment.
    • Determine at least two (2) ways in which your findings could be used to better drive management decisions.
    • Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.

    Your assignment must follow these formatting requirements:

    • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
    • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

    The specific course learning outcomes associated with this assignment are:

    • Discuss how automated accounting software can help management make better informed business decisions.
    • Organize information between Word and Excel to communicate to internal and external users.
    • Use technology and information resources to research issues in microcomputer applications for accountants.
    • Write clearly and concisely about microcomputer applications for accountants using proper writing mechanics.

    Click here to view the grading rubric for this assignment.