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Attached is a word document that includes information about how to research the beta of the publicly-traded company Mc Donalds. Once you have completed your research, please submit your company's beta and a brief interpretation of that beta (that is, does it indicate that your selected stock is more or less risky than the market in general) in this DB forum. Suggest some reasons to support your conclusion.

Researching Your Companys Beta

This discussion board question relates to the stock selections you have already made. Remember, your selections are of publicly held companies, which means they are owned by their shareholders who have bought these shares in the open market (New York Stock Exchange). These shares, as we know, have a market price/value that changes daily depending on how many buyers and sellers of the stock there are on any given day.

Keep in mind that a company has a certain, fixed number of common shares outstanding. This is based on the capital structure of the company which began at the time of the companys Initial Public Offering (IPO or going public). However, once a company has established the number of shares that will be sold, that number remains fixed at least in the short run. Additional shares may be issued, but this is a significant change in the companys capital structure and doesnt happen generally unless the company has unusual expansion plans or an acquisition for which they need financing.

Thus, back to the point. All publicly traded stocks have a beta which measures that stocks movement around the market in general. This is material that is covered in your textbook and on which I have provided lecture notes.

What is required for this weeks Discussion Board is to research the beta of the publicly traded stock that you have selected. Now, we know the market in general (as we define as all publicly traded securities) has a beta of 1. We also know that the market is risky and the market is volatile. So, if you have a stock with a beta greater than 1, you interpret that stock to be more risky than the market as defined. If you have a stock with a beta less than 1, that stock is considered less risky than the market.

Lets take the example of JP Morgan Chase (which no student chose.) A good place to look for your companys beta is on Yahoo Finance which is I like as the best free source of market information.

Once you are on the site, in the upper lefthand area where it asks Enter Symbol. If you are not certain of the symbol (ticker) same thing you begin by typing the name JP Morgan Chase and it will appear below and you will see that the symbol or ticker is JPM. Click on that and a screen will appear with not only the days trading information for JPM but also some additional high-level information and this includes the beta. Here you will see that JPMs beta is 1.11x. Thats interpreted as being somewhat risky and we know that JPM Chase, as a large financial institution that was impacted by the financial crisis and also had a very large trading-related loss about three years ago, and therefore continues to be considered a rather risky investment today.

So, your assignment will be to research the beta of your selected stock and submit the beta and a brief interpretation of the resulting number.

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