Stocks April 1, 2014 – April 1, 2017 (8.5 points total)

In April 2014, an investor purchased $10,000 of each stock shown in Table 1 below.

Portfolio Changes April 2017

The investor decides to keep her best performing stock in each industry and sell the rest to generate cash for a real estate investment. Using the information in the Table below, which stock in each industry would you advise this investor to keep? Why? Be sure to discuss both risk and return. Record your answers in the table below.

Industry	Stock Symbol	Value of Shares 2017	Beta	Required Rate of Return*	Dividend Yield 2017	Annual Rate of Return 2017	Average Rate of Return (2014 - 2017)	Coefficient of Variation, CV
Life Insurance	Prudential PRU	$14,297.17	1.690	10.8%	3.7%	40.0%	14.1%	1.61
Life Insurance	MetLife MET	$11,007.99	1.610	10.3%	3.5%	20.4%	4.0%	3.80
Apparel Stores	Nordstrom JWN	$8,589.59	0.990	6.7%	2.9%	-10.0%	-2.8%	-9.04
Apparel Stores	TJX Companies TJX	$13,549.39	0.660	4.8%	1.4%	1.7%	10.9%	0.79
Restaurants	Dunkin' Brands DNKN	$12,443.78	0.190	2.0%	2.6%	16.8%	8.3%	1.77
Restaurants	Panera PNRA	$20,396.16	0.310	2.7%	0.0%	45.5%	27.4%	0.57
Discount Stores	Wal-Mart WMT	$9,913.91	0.130	1.7%	3.0%	12.0%	0.2%	63.60
Discount Stores	Target TGT	$9,486.81	0.520	3.9%	3.0%	-30.1%	1.5%	20.53
Portfolio Value (before stock sale)		$99,684.79	0.745

Problem continues on next page

Industry	Company’s Stock Symbol	Rationale for keeping this stock and not the other in this industry
Life Insurance	PRU or MET?
Apparel Stores	JWN or TJX?
Restaurants	DNKN or PNRA?
Discount Stores	TGT or WMT?

New Portfolio

For each stock you chose to keep in the portfolio, enter the company’s stock symbol, value of shares April 2017 and beta from Table 2 into the chart below.

Then calculate:

a) Total value of new portfolio

b) % of portfolio value for each stock

c) Weighted beta of each stock and beta for the new portfolio

Industry	Company's Stock Symbol	Value of Shares April 2017	% of New Portfolio	Beta	Weighted Beta
Life Insurance
Apparel Stores
Restaurants
Discount Stores
	New Portfolio

d) As measured by beta, is the New Portfolio more or less risky than the one shown in Table 2? (1.0 point)