You are required to review the literature on the topic of investment. Review a minimum of 10 peer-reviewed journals on the topic of investment relating to risk and return for this assessment.
Pesaran & Yamagata (2018) while examining the return series based on student t tests of individual securities stated that Sharpe-Lintner CAPM may not be effective in predicting the financial crisis period. They found a “negative correlation between a twelve-months moving average p-values of the test and excess returns of long/short equity strategies (relative to the return on S&P 500) over the period November 1994 to June 2015” Pesaran & Yamagata (2018, P.1).
Pesaran, H. & Yamagata, T. (2018) Testing for Alpha in Linear Factor Pricing Models with a Large Number of Securities, Working Paper revised version January 2018, retrieved from http://www.econ.cam.ac.uk/people-files/emeritus/mhp1/wp18/PY_LFPM_30_Jan_2018.pdf
Select any one technology company from the list given in the next page, Table 1. Look at the S&P/ASX 200 Information Technology Index from the ASX website (https://www.asx.com.au/products/sector-indices.htm#informationtechnology).
Provide the background of the organisation including, but not limited, to the following:
Table 1: List of Selected Information Technology Companies
|Altium Limited (ALU)||$28.04||$28.04||$28.04||$28.04||1,440,042|
|Carsales.com Limited (CAR)||$15.17||$15.17||$15.17||$15.17||1,570,448|
|Computershare Limited (CPU)||$11.70||$11.70||$11.70||$11.70||3,568,164|
|Domain Holdings Australia Limited (DHG)||$2.64||$2.64||$2.64||$2.64||1,729,573|
|IRESS Limited (IRE)||$11.18||$11.18||$11.18||$11.18||633,258|
|Link Administration Holdings Limited (LNK)||$4.02||$4.02||$4.02||$4.02||16,190,345|
|MYOB Group Limited (MYO)||$3.40||$3.40||$3.40||$3.40||6,983,260|
|NEXTDC Limited (NXT)||$8.19||$8.19||$8.19||$8.19||3,210,483|
|REA Group Ltd (REA)||$95.35||$95.35||$95.35||$95.35||386,053|
|Technology One Limited (TNE)||$7.13||$7.13||$7.13||$7.13||1,894,220|
|Wisetech Global Limited (WTC)||$14.03||$14.03||$14.03||$14.03||2,128,118|
|Xero Limited (XRO)||$73.94||$73.94||$73.94||$73.94||934,059|
Record on the excel spreadsheet:
The monthly closing price history of the chosen company as well as the S&P/ASX 200 INFORMATION TECHNOLOGY Index
Are there any variations between Beta as given in literature and your estimates of Beta for the 2 periods? Discuss your answer based on your findings.
Provide a commentary of current and recent (within the last year) developments relating to the company.
Focus on changes that have had an impact on the share price of the company, including but not limited to development and changes relating to:
Make a recommendation as to whether you would buy, sell or hold the shares based on your findings. Your recommendation can include suggested share price levels but should be based on the analysis in sections A-D.