Assignment On

Securities & Market portfolio

Submitted To,
Mr. G.M. Wali Ullah
Lecturer, School of Business
Depart of Finance

Business Finance ||
Section- 02

Submission Date-
07 August 2017
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Letter of Transmittal

7, August 2017
G.M. Wali Ullah.
Department of Finance,
Lecturer, School of Business,
Independent University, Bangladesh

Subject: Submission of report on Securities & Market portfolio

Dear Sir,
We are very pleased to submit this report on Securities & Market portfolio, which has been
prepared for the requirement of the course of FIN-302. We have tried our level best to complete
this report properly and to write an efficient assignment within all the constraints and the report
contains a comprehensive study on financial aspects.
We appreciate that the approach really contributes in giving our course learning a lasting shape
on us. We have a great hope that the report will meet your expectation and aid you in getting a
clearer idea about Securities & market portfolio of our assign companies. We have tried our level
best to follow the guidelines of yours. We are very much glad that you have given us the
opportunity to prepare this report for you and hope that this report will meet the standards of
your judgment.

Sincerest gratitude for your illuminating guidance.

Sincerely yours,
Ishaq Shariar (on behalf of group members)
Students, sec-2
FIN-302
Independent University, Bangladesh.

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Table of content
Table of Contents:
Executive Summary.....................................................................................................................................4
Acknowledgement.......................................................................................................................................5
Apple (AAPL)................................................................................................................................................6
Ford Motors (F)..............................................................................................................................7
Market Portfolio (S&P 500 INDEX ^GSPC)....................................................................................................8
Summary of calculations with graph of efficient set....................................................................................9
AVERAGE RETURN-..........................................................................................................................9
STANDADARD DEVIATION................................................................................................................9
VARIANCE......................................................................................................................................10
CORRELATION................................................................................................................................10
COVARIANCE..................................................................................................................................11
MINIMUM VARIANCE PORTFOLIO.................................................................................................12
Efficiency set..................................................................................................................................13
Conclusion.................................................................................................................................................14

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Executive Summary

We were assigned to work with two companies Apple (AAPL) and Ford Motors
(F) and one market portfolio named S&P 500 INDEX (^GSPC). All the data are
collected and downloaded from Yahoo Finance Historical Prices. We provided the
company profiles of AAPL and F and S&P 500 INDEX, describing each
company in details in our report. AAPL is one of the largest multinational
corporations established in April 1976. The Ford Motor Company (commonly
referred to simply as "Ford") is an American multinational automaker
headquartered in Dearborn, Michigan, a suburb of Detroit. It was founded
by Henry Ford and incorporated on June 16, 1903. S&P 500 is an American stock
market index based on the market capitalizations of 500 large companies having
common stock listed on the NYSE or NASDAQ. Then we included the summary
of calculations with graph of efficient set about the findings. In this part of our
report we wrote the summary of our calculations, the formulas for our calculations
in details and there is also a description of the graph of the efficient set given. We
also provided a conclusion and references in our report.

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Acknowledgement
The success of this financial report depends on the contribution of a number of
people, especially those who take the time to share their thoughtful guidance and
suggestion to improve this financial report. First of all we would like to pay our
gratitude to almighty Allah, who has given us patience to complete this financial
report. Because working on this financial report for a week and then preparing a
report regarding our experience is quite tedious job.
We would like to thank Independent University, Bangladesh (IUB) for planning
such a course that gave us the chance to gather practical knowledge about what we
learnt in 03 months. The knowledge we gathered throughout the course would help
us to develop our future career.
Then we would like to express our gratefulness to our honorable faculty of
Business School G.M. Wali Ullah in Independent University (IUB) who supported
us sharing his knowledge according on this Financial Analysis report and showing
the right way to put our effort in right place.
Lastly, we must be thankful to our friends for their endless inspiration not to be
hopeless and keep working harder.

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Apple
(AAPL)
Apple Inc. is an American multinational technology
company headquartered in Cupertino, California. Apple
was founded by Steve Jobs, Steve Wozniak, and Ronald
Wayne in April 1976 to develop and sell personal
computers. It was incorporated as Apple Computer,
Inc. in January 1977, and sales of its computers saw significant momentum and revenue growth
for the company. Apple is the world's largest information technology company by revenue and
the world's second-largest mobile phone manufacturer after Samsung. In February 2015, Apple
became the first U.S. company to be valued at over US$700 billion. The company employs
116,000 full-time employees as of October 2016 and maintains 498 retail stores in 22 countries
as of July 2017. It operates the iTunes Store, which is the world's largest music retailer. As of
January 2016, more than one billion Apple products are actively in use worldwide.

Apple's worldwide annual revenue totaled $215 billion for the 2016 fiscal year. The company
enjoys a high level of brand loyalty and has been repeatedly ranked as the world's most valuable
brand. However, it receives significant criticism regarding the labor practices of its contractors
and its environmental and business practices, including the origins of source materials.
It is also the largest publicly traded corporation in the world by market capitalization, with an
estimated market capitalization of $800 billion in May 2017. Apple amassed 65% of all profits
made by the eight largest worldwide Smartphone manufacturers in quarter one of 2014,
according to a report by can accord Genuity. In the first quarter of 2015, the company garnered
92% of all earnings.
On April 30, 2017, The Wall Street Journal reported that Apple had cash reserves of
$250 billion, officially confirmed by Apple as specifically $256.8 billion a few days later.
Coupled with a strong market capitalization around the same time, reports predicted Apple will
soon become the world's first $1 trillion dollar company.

As of June 2017, there are 5,213,840,000 shares outstanding. This is down from 5.393 billion in
2016, 5.705 billion in 2015, 6.030 billion in 2014, and 6.571 billion in 2013. This decrease is due
to share buybacks by the company.

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Ford
Motors (F)
The Ford Motor Company is an American multinational automaker headquartered in Dearborn,
Michigan, a suburb of Detroit. It was founded by Henry Ford and incorporated on June 16, 1903.
The company sells automobiles and commercial vehicles under the Ford brand and most luxury
cars under the Lincoln brand. Ford also owns Brazilian SUV manufacturer, Troller, and
Australian performance car manufacturer FPV. In the past, it has also produced tractors and
automotive components. Ford owns an 8% stake in Aston Martin of the United Kingdom, and a
49% stake in Jiangling of China.

It also has a number of joint-ventures, one in China (Changan Ford), one in Taiwan (Ford Lio
Ho), one in Thailand (AutoAlliance Thailand), one in Turkey (Ford Otosan), and one in Russia
(Ford Sollers). It is listed on the New York Stock Exchange and is controlled by the Ford family,
although they have minority ownership.

Ford is the second-largest U.S.-based automaker (preceded by General Motors) and the fifth-
largest in the world based on 2015 vehicle production. At the end of 2010, Ford was the fifth
largest automaker in Europe. Ford is the eighth-ranked overall American-based company in the
2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion. In 2008, Ford
produced 5.532 million automobiles and employed about 213,000 employees at around 90 plants
and facilities worldwide.

The company went public in 1956 but the Ford family, through special Class B shares, still
retains 40 percent voting rights. They have a very sustainable and potential growth rate in the
market. According to last month analysis they had a share of 72271733 with a closing price of
$11.20. Their strategy is to achieve top quartile returns by expanding to an automotive and
mobility company through business model innovation focusing on financial objectives that create
value.

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Market Portfolio (S&P 500 INDEX ^GSPC)

The Standard & Poor's 500, often abbreviated as the S&P 500, or just "the S&P", is an
American stock market index based on the market capitalizations of 500 large companies having
common stock listed on the NYSE or NASDAQ. The S&P 500 index components and their
weightings are determined by S&P Dow Jones Indices. It differs from other U.S. stock market
indices, such as the Dow Jones Industrial Average or the NASDAQ Composite index, because of
its diverse constituency and weighting methodology. It is one of the most commonly followed
equity indices, and many consider it one of the best representations of the U.S. stock market, and
a bellwether for the U.S. economy. The National Bureau of Economic Research has classified
common stocks as a leading indicator of business cycles. The S&P 500 was developed and
continued to be maintained by S&P Dow Jones Indices, a joint venture majority-owned by S&P
Global. S&P Dow Jones Indices publishes many stock market indices such as the Dow Jones
Industrial Average, S&P Mid Cap 400, the S&P Small Cap 600, and the S&P Composite 1500. It
is a free-float capitalization-weighted index, and has many ticker symbols, such as:
^GSPC, INX and $SPX. The Standard & Poor's 500 Index (S&P 500) is an index of
500 stocks seen as a leading indicator of U.S. equities and a reflection of the performance of
the large cap universe, made up of companies selected by economists. The S&P 500 is a market
value weighted index and one of the common benchmarks for the U.S. stock market; other S&P
indexes include small cap companies with market capitalization between $300 million and $2
billion, and an index of midcap companies. Investment products based on the S&P 500 include
index funds and exchange-traded funds are available to investors. The S&P 500 has become a
preferred index for U.S. stocks, unseating the Dow Jones Industrial Average (DJIA). The S&P
500 is perceived as more representative of the market because it is made of 500 companies,
compared to the DJIAs 30. There is also a major difference in how companies are represented in
either index. The S&P 500 uses a market cap methodology, giving a higher weighting to larger
companies, whereas the DJIA uses a price weighting methodology which gives more expensive
stocks a higher weighting. In order to keep the S&P 500 Index consistent over time, it is adjusted
to capture corporate actions which affect market capitalization, such as additional share

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issuance, dividends and restructuring events such as mergers or spin-offs. Additionally, to remain
indicative of the U.S. stock market, the constituent stocks are changed from time to time.

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Summary of calculations with graph of

efficient set
AVERAGE RETURN-

Apple Ford S&P 500

AVERAGE 1.90% 0.26% 0.95%

AVERAGE
0.02

0.01

Appl e Ford S&P 500

AVERAGE

N
( r At R A )2
STANDADARD DEVIATION
= =- A A2
t =1
N

Apple Ford S&P 500

STANDADARD DEVIATION 6.55% 5.79% 2.80%

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STANDADARD DEVIATION
0.07
0.06

0.03

Apple Ford S&P 500

STANDADARD DEVIATION
N

VARIANCE- ( r At R A )2
t =1
=
A2 N

Apple Ford S&P 500

VARIANCE 0.43% 0.34% 0.08%

VARIANCE
0
0

Appl e Ford S&P 500

VARIANCE

N
( R At R A )( R Bt RB )
CORRELATION
-= AB
t =1

N N
( R At R A )2 ( R Bt R B )2
t =1 t =1

Apple and S&P Ford and S&P

CORRELATION 0.609016895 0.641667497

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CORRELATION

0.64

0.61

Appl e and S&P Ford a nd S&P

CORRELATION
N
( R At R A )( R Bt R B )
COVARIANCE- AB =
t =1
N

Apple and S&P Ford and S&P

COVARIANCE 0.001118805 0.001042687

COVARIANCE

Apple a nd S&P Ford and S&P

COVARIANCE

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Apple Ford
BETA 1.42212 1.325364

BETA
1.42

1.33

Appl e Ford
BETA

MINIMUM VARIANCE PORTFOLIO-

MINIMUM VARIANCE PORTFOLIO

WEIGHT OF "Apple" 39.86%
WEIGHT OF "Ford" 60.14%

PORTFOLIO RETURN 0.92%

PORTFOLIO RISK 5.12%

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PORTFOLIO risk and return

5.12%

0.92%

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Efficiency set-

Data for Efficiency set

PORTFOLIO
Apple Ford PORTFOLIO RETURN RISK
100% 0% 1.90% 6.55%
80% 20% 1.57% 5.80%
60% 40% 1.25% 5.30%
40% 60% 0.92% 5.12%
20% 80% 0.59% 5.30%
0% 100% 0.26% 5.79%

Effi ciency Set

1.90%
2.00%
1.80% 1.57%
1.60%
1.40% 1.25%
Portoli Return

1.20%
0.92%
1.00%
0.80% 0.59%
0.60%
0.40% 0.26%
0.20%
0.00%
5.00% 5.20% 5.40% 5.60% 5.80% 6.00% 6.20% 6.40% 6.60% 6.80%
PORTFOLIO RISK

The efficient frontier is the set of optimal portfolios that offers the highest expected
return for lowest risk for a given level of expected return. We can see that the lowest risk
offers 1.25% return and it has weights of 60% and 40%. So it is the minimum variance
portfolio that we have calculated. Minimum variance portfolio is the combination of
weights that has highest expected return for lowest possible risk.

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Conclusion

In our report we have calculated Expected return, SD, Variance, Covariance, Correlation,
minimum variance portfolio and risk and return of minimum variance portfolio. These data will
help investors to invest more carefully and they can earn what they have expected. We have also
shown an efficiency set which will help the investors to invest in a proper portfolio and they can
invest in a minimum variance portfolio which will give them highest return in a lowest possible
risk.

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References

1. Wikipedia. (2017). Apple (AAPL).

Available: https://en.wikipedia.org/wiki/Apple_Inc.

2. Wikipedia. (2017). Ford Motors (F).

Available: https://en.wikipedia.org/wiki/Ford_Motor_Company.

3. Wikipedia. (2017). S&P 500 Index.

Available: https://en.wikipedia.org/wiki/S%26P_500_Index.

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