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SECTOR DATA CODE NAME SECTOR Sector Fundamentals SECTOR PRICE TO EARING RATIO RETURN ON EQUITY DEBT TO EQUITY NET INTEREST MARGIN GEM G8 EDUCATION CONSUMER STAPLES -EDUCATION -Child Care & Family...

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SECTOR DATA
    CODE    NAME    SECTOR        Sector Fundamentals    SECTOR PRICE TO EARING RATIO    RETURN ON EQUITY    DEBT TO EQUITY    NET INTEREST MARGIN
    GEM    G8 EDUCATION    CONSUMER STAPLES -EDUCATION -Child Care & Family Services        CONSUMER STAPLES - EDUCATION    18.90    9.80%    87.20
    IEL    IDP EDUCATION    CONSUMER STAPLES-EDUCATION - Commercial Educational Services        FINANCIALS - BANKING    12.30    8.10%        1.80%
    CBA    COMMONWEALTH BK.OF AUS.    FINANCIALS - BANKING        CONSUMER STAPLES - RETAIL    22.30    17.10%    34.40
    NAB    NATIONAL AUS.BANK    FINANCIALS - BANKING        HEALTH CARE - PHARMACEUTICAL    44.90    22.60%    72.70
    WOW    WOOLWORTHS GROUP    CONSUMER STAPLES - RETAIL        CONSUMER SERVICE(DISCRETIONARY)-HOSPITALITY    17.50    6.00%    52.20
    WES    WESFARMERS    CONSUMER STAPLES - RETAIL
    SGR    STAR ENTERTAINMENT GROUP    CONSUMER SERVICE(DISCRETIONARY)-HOSPITALITY
    FLT    FLIGHT CENTRE TRAVEL GP.    CONSUMER SERVICE(DISCRETIONARY)-HOSPITALITY
    CUV    CLINUVEL PHARMACEUTICALS    HEALTH CARE - PHARMACEUTICAL
    CSL    CSL    HEALTH CARE - PHARMACEUTICAL
STOCKS DATA
    Name    G8 EDUCATION PRICE    G8 EDUCATION - P/E RATIO    G8 EDUCATION - ROE (%)    D/E ratio    Beta        IDP EDUCATION PRICE    IDP EDUCATION - P/E RATIO    IDP EDUCATION - ROE (%)    D/E ratio    Beta        COMMONWEALTH BK.OF AUS. PRICE    COMMONWEALTH BK.OF AUS. - P/E RATIO    COMMONWEALTH BK.OF AUS. - ROE (%)    NET INTEREST MARGIN(%)    Beta        NATIONAL AUS.BANK PRICE    NATIONAL AUS.BANK - P/E RATIO    NATIONAL AUS.BANK - ROE (%)    NET INTEREST MARGIN(%)    Beta        WOOLWORTHS GROUP PRICE    WOOLWORTHS GROUP - P/E RATIO    WOOLWORTHS GROUP - ROE (%)    D/E ratio    Beta        WESFARMERS PRICE    WESFARMERS - P/E RATIO    WESFARMERS - ROE (%)    D/E ratio    Beta        STAR ENTERTAINMENT GROUP PRICE    STAR ENTERTAINMENT GROUP - P/E RATIO    STAR ENTERTAINMENT GROUP - ROE (%)    D/E ratio    Beta        FLIGHT CENTRE TRAVEL GP. PRICE    FLIGHT CENTRE TRAVEL GP. - P/E RATIO    FLIGHT CENTRE TRAVEL GP. - ROE (%)    D/E ratio    Beta        CLINUVEL PHARMACEUTICALS PRICE    CLINUVEL PHARMACEUTICALS - P/E RATIO    CLINUVEL PHARMACEUTICALS - ROE (%)    D/E ratio    Beta        CSL PRICE    CSL - P/E RATIO    CSL - ROE (%)    D/E ratio    Beta
    1/10/20    1.83    13.50    7.45    42.12    1.39        18.37    70.00    46.10    39.21    1.81        82.50    17.00    14.25    2.10    0.87        24.93    14.80    8.79    1.76    1.12        37.82    18.30    28.67    30.98    0.55        43.90    21.10    22.44    30.38    0.98        4.62    21.40    3.38    31.07    1.73        39.86    16.90    14.28    17.41    2.32        28.18    74.90    26.05    0.76    0.75        299.30    50.50    33.52    88.79    0.51
    1/13/20    1.82    13.50    7.45    42.12    1.39        18.73    71.40    46.10    39.21    1.81        82.48    17.00    14.25    2.10    0.87        24.93    14.80    8.79    1.76    1.12        37.43    18.10    28.67    30.98    0.55        43.60    20.90    22.44    30.38    0.98        4.62    21.40    3.38    31.07    1.73        40.08    17.00    14.28    17.41    2.32        29.00    77.10    26.05    0.76    0.75        294.50    49.70    33.52    88.79    0.51
    1/14/20    1.84    13.60    7.45    42.12    1.39        19.36    73.80    46.10    39.21    1.81        83.17    17.10    14.25    2.10    0.87        25.06    14.90    8.79    1.76    1.12        38.38    18.60    28.67    30.98    0.55        43.43    20.80    22.44    30.38    0.98        4.60    21.30    3.38    31.07    1.73        40.00    17.00    14.28    17.41    2.32        29.00    77.10    26.05    0.76    0.75        296.50    50.00    33.52    88.79    0.51
    1/15/20    1.82    13.40    7.45    42.12    1.39        19.69    75.00    46.10    39.21    1.81        83.66    17.20    14.25    2.10    0.87        25.17    14.90    8.79    1.76    1.12        38.31    18.60    28.67    30.98    0.55        43.67    21.00    22.44    30.38    0.98        4.65    21.50    3.38    31.07    1.73        40.20    17.10    14.28    17.41    2.32        29.31    77.90    26.05    0.76    0.75        297.74    50.20    33.52    88.79    0.51
    1/16/20    1.82    13.40    7.45    42.12    1.39        20.01    76.20    46.10    39.21    1.81        84.46    17.40    14.25    2.10    0.87        25.36    15.00    8.79    1.76    1.12        38.68    18.80    28.67    30.98    0.55        43.99    21.10    22.44    30.38    0.98        4.72    21.90    3.38    31.07    1.73        39.86    16.90    14.28    17.41    2.32        28.81    76.60    26.05    0.76    0.75        300.89    50.80    33.52    88.79    0.51
    1/17/20    1.81    13.40    7.45    42.12    1.39        20.16    76.80    46.10    39.21    1.81        84.05    17.30    14.25    2.10    0.87        25.46    15.10    8.79    1.76    1.12        39.04    18.90    28.67    30.98    0.55        44.26    21.20    22.44    30.38    0.98        4.70    21.80    3.38    31.07    1.73        39.47    16.80    14.28    17.41    2.32        29.31    77.90    26.05    0.76    0.75        300.10    50.60    33.52    88.79    0.51
    1/20/20    1.80    13.30    7.45    42.12    1.39        20.45    77.90    46.10    39.21    1.81        83.93    17.30    14.25    2.10    0.87        25.61    15.20    8.79    1.76    1.12        39.24    19.00    28.67    30.98    0.55        43.92    21.10    22.44    30.38    0.98        4.58    21.20    3.38    31.07    1.73        38.75    16.50    14.28    17.41    2.32        28.84    76.60    26.05    0.76    0.75        303.45    51.20    33.52    88.79    0.51
    1/21/20    1.79    13.20    7.45    42.12    1.39        20.40    77.70    46.10    39.21    1.81        83.48    17.20    14.25    2.10    0.87        25.70    15.20    8.79    1.76    1.12        40.01    19.40    28.67    30.98    0.55        44.09    21.20    22.44    30.38    0.98        4.47    20.70    3.38    31.07    1.73        37.61    16.00    14.28    17.41    2.32        28.62    76.10    26.05    0.76    0.75        304.34    51.30    33.52    88.79    0.51
    1/22/20    1.80    13.30    7.45    42.12    1.39        20.27    77.20    46.10    39.21    1.81        84.45    17.40    14.25    2.10    0.87        25.71    15.30    8.79    1.76    1.12        41.32    20.00    28.67    30.98    0.55        44.77    21.50    22.44    30.38    0.98        4.43    20.50    3.38    31.07    1.73        36.91    15.70    14.28    17.41    2.32        28.93    76.90    26.05    0.76    0.75        308.50    52.00    33.52    88.79    0.51
    1/23/20    1.77    13.10    7.45    42.12    1.39        20.04    76.30    46.10    39.21    1.81        84.52    17.40    14.25    2.10    0.87        25.69    15.20    8.79    1.76    1.12        40.94    19.80    28.67    30.98    0.55        44.52    21.40    22.44    30.38    0.98        4.40    20.40    3.38    31.07    1.73        37.99    16.10    14.28    17.41    2.32        29.00    77.10    26.05    0.76    0.75        307.19    51.80    33.52    88.79    0.51
    1/24/20    1.77    13.10    7.45    42.12    1.39        19.72    75.10    46.10    39.21    1.81        84.94    17.50    14.25    2.10    0.87        25.80    15.30    8.79    1.76    1.12        40.84    19.80    28.67    30.98    0.55        44.91    21.50    22.44    30.38    0.98        4.39    20.30    3.38    31.07    1.73        37.33    15.90    14.28    17.41    2.32        28.25    75.10    26.05    0.76    0.75        310.70    52.40    33.52    88.79    0.51
    1/27/20    1.77    13.10    7.45    42.12    1.39        19.72    75.10    46.10    39.21    1.81        84.94    17.50    14.25    2.10    0.87        25.80    15.30    8.79    1.76    1.12        40.84    19.80    28.67    30.98    0.55        44.91    21.50    22.44    30.38    0.98        4.39    20.30    3.38    31.07    1.73        37.33    15.90    14.28    17.41    2.32        28.25    75.10    26.05    0.76    0.75        310.70    52.40    33.52    88.79    0.51
    1/28/20    1.71    12.70    7.45    42.12    1.39        19.02    72.50    46.10    39.21    1.81        84.02    17.30    14.25    2.10    0.87        25.61    15.20    8.79    1.76    1.12        41.15    20.00    28.67    30.98    0.55        44.32    21.30    22.44    30.38    0.98        4.16    19.30    3.38    31.07    1.73        35.79    15.20    14.28    17.41    2.32        28.13    74.80    26.05    0.76    0.75        312.66    52.80    33.52    88.79    0.51
    1/29/20    1.74    12.80    7.45    42.12    1.39        19.08    72.70    46.10    39.21    1.81        84.61    17.40    14.25    2.10    0.87        25.80    15.30    8.79    1.76    1.12        41.19    20.00    28.67    30.98    0.55        44.88    21.50    22.44    30.38    0.98        4.09    19.00    3.38    31.07    1.73        36.14    15.30    14.28    17.41    2.32        28.14    74.80    26.05    0.76    0.75        316.09    53.30    33.52    88.79    0.51
    1/30/20    1.70    12.60    7.45    42.12    1.39        17.90    68.20    46.10    39.21    1.81        85.44    17.60    14.25    2.10    0.87        25.88    15.40    8.79    1.76    1.12        41.44    20.10    28.67    30.98    0.55        45.49    21.80    22.44    30.38    0.98        4.10    19.00    3.38    31.07    1.73        35.24    15.00    14.28    17.41    2.32        26.92    71.50    26.05    0.76    0.75        310.49    52.40    33.52    88.79    0.51
    1/31/20    1.76    13.00    7.45    42.12    1.39        17.77    67.70    46.10    39.21    1.81        85.26    17.50    14.25    2.10    0.87        25.86    15.30    8.79    1.76    1.12        41.84    20.30    28.67    30.98    0.55        45.21    21.70    22.44    30.38    0.98        4.18    19.40    3.38    31.07    1.73        35.39    15.00    14.28    17.41    2.32        27.70    73.60    26.05    0.76    0.75        312.05    52.60    33.52    88.79    0.51
    2/3/20    1.70    12.60    7.45    42.12    1.39        16.58    63.20    46.10    39.21    1.81        84.55    17.40    14.25    2.10    0.87        25.50    15.10    8.79    1.76    1.12        41.82    20.30    28.67    30.98    0.55        45.09    21.60    22.44    30.38    0.98        4.03    18.70    3.38    31.07    1.73        34.75    14.80    14.28    17.41    2.32        26.55    70.60    26.05    0.76    0.75        311.41    52.50    33.52    88.79    0.51
    2/4/20    1.73    12.80    7.45    42.12    1.39        16.65    63.40    46.10    39.21    1.81        84.31    17.30    14.25    2.10    0.87        25.60    15.20    8.79    1.76    1.12        42.38    20.50    28.67    30.98    0.55        45.06    21.60    22.44    30.38    0.98        4.13    19.10    3.38    31.07    1.73        35.83    15.20    14.28    17.41    2.32        26.20    69.60    26.05    0.76    0.75        313.35    52.90    33.52    88.79    0.51
    2/5/20    1.73    12.80    7.45    42.12    1.39        17.68    67.40    46.10    39.21    1.81        83.28    17.10    14.25    2.10    0.87        25.61    15.20    8.79    1.76    1.12        42.22    20.50    28.67    30.98    0.55        44.93    21.60    22.44    30.38    0.98        4.18    19.40    3.38    31.07    1.73        36.42    15.50    14.28    17.41    2.32        25.55    67.90    26.05    0.76    0.75        315.64    53.30    33.52    88.79    0.51
    2/6/20    1.75    12.90    7.45    42.12    1.39        17.32    66.00    46.10    39.21    1.81        84.23    17.30    14.25    2.10    0.87        25.95    15.40    8.79    1.76    1.12        42.55    20.60    28.67    30.98    0.55        45.55    21.90    22.44    30.38    0.98        4.21    19.50    3.38    31.07    1.73        36.66    15.60    14.28    17.41    2.32        25.29    67.20    26.05    0.76    0.75        320.62    54.10    33.52    88.79    0.51
    2/7/20    1.73    12.80    7.45    42.12    1.39        17.23    65.60    46.10    39.21    1.81        84.80    17.40    14.25    2.10    0.87        25.92    15.40    8.79    1.76    1.12        42.72    20.70    28.67    30.98    0.55        45.55    21.90    22.44    30.38    0.98        4.16    19.30    3.38    31.07    1.73        35.78    15.20    14.28    17.41    2.32        25.08    66.60    26.05    0.76    0.75        320.03    54.00    33.52    88.79    0.51
    2/10/20    1.69    12.50    7.45    42.12    1.39        16.80    64.00    46.10    39.21    1.81        84.32    17.30    14.25    2.10    0.87        25.78    15.30    8.79    1.76    1.12        43.11    20.90    28.67    30.98    0.55        45.74    21.90    22.44    30.38    0.98        4.19    19.40    3.38    31.07    1.73        34.03    14.40    14.28    17.41    2.32        25.59    68.00    26.05    0.76    0.75        322.96    54.50    33.52    88.79    0.51
    2/11/20    1.69    12.50    7.45    42.12    1.39        16.68    50.70    46.10    39.21    1.81        84.72    17.60    14.25    2.10    0.87        25.90    15.40    8.79    1.76    1.12        43.20    20.90    28.67    30.98    0.55        45.85    22.00    22.44    30.38    0.98        4.19    19.40    3.38    31.07    1.73        33.76    14.30    14.28    17.41    2.32        26.02    69.10    26.05    0.76    0.75        325.73    55.00    33.52    88.79    0.51
    2/12/20    1.68    12.40    7.45    42.12    1.39        21.42    65.10    46.10    39.21    1.81        88.18    18.30    14.25    2.10    0.87        26.13    15.50    8.79    1.76    1.12        43.05    20.90    28.67    30.98    0.55        45.39    21.80    22.44    30.38    0.98        4.21    19.50    3.38    31.07    1.73        34.44    14.60    14.28    17.41    2.32        25.65    68.20    26.05    0.76    0.75        328.25    51.60    33.52    88.79    0.51
    2/13/20    1.63    12.00    7.45    42.12    1.39        22.82    69.40    46.10    39.21    1.81        88.73    18.40    14.25    2.10    0.87        26.49    15.70    8.79    1.76    1.12        42.88    20.80    28.67    30.98    0.55        45.61    21.90    22.44    30.38    0.98        4.18    19.40    3.38    31.07    1.73        34.72    14.70    14.28    17.41    2.32        25.70    68.30    26.05    0.76    0.75        330.99    52.00    33.52    88.79    0.51
    2/14/20    1.64    12.10    7.45    42.12    1.39        23.50    71.50    46.10    39.21    1.81        90.99    18.90    14.25    2.10    0.87        27.35    16.20    8.79    1.76    1.12        43.14    20.90    28.67    30.98    0.55        45.65    21.90    22.44    30.38    0.98        4.20    19.50    3.38    31.07    1.73        35.08    14.90    14.28    17.41    2.32        25.88    68.80    26.05    0.76    0.75        331.19    52.00    33.52    88.79    0.51
    2/17/20    1.63    12.00    7.45    42.12    1.39        22.25    67.60    46.10    39.21    1.81        89.46    18.60    14.25    2.10    0.87        27.28    16.20    8.79    1.76    1.12        43.27    21.00    28.67    30.98    0.55        45.45    21.80    22.44    30.38    0.98        4.15    19.20    3.38    31.07    1.73        34.64    14.70    14.28    17.41    2.32        25.55    67.90    26.05    0.76    0.75        332.55    52.20    33.52    88.79    0.51
    2/18/20    1.61    11.90    7.45    42.12    1.39        22.72    69.10    46.10    39.21    1.81        90.26    18.80    14.25    2.10    0.87        27.28    16.20    8.79    1.76    1.12        43.52    21.10    28.67    30.98    0.55        45.25    24.60    22.44    30.38    0.98        4.11    19.00    3.38    31.07    1.73        34.52    14.70    14.28    17.41    2.32        25.61    68.10    26.05    0.76    0.75        331.17    52.00    33.52    88.79    0.51
    2/19/20    1.65    12.20    7.45    42.12    1.39        23.32    70.90    46.10    39.21    1.81        87.83    18.30    14.25    2.10    0.87        27.31    16.20    8.79    1.76    1.12        43.53    21.10    28.67    30.98    0.55        46.55    25.30    22.44    30.38    0.98        4.14    19.20    3.38    31.07    1.73        35.20    14.90    14.28    17.41    2.32        25.42    67.60    26.05    0.76    0.75        341.00    53.60    33.52    88.79    0.51
    2/20/20    1.69    12.40    7.45    42.12    1.39        24.19    73.50    46.10    39.21    1.81        87.85    18.30    14.25    2.10    0.87        27.40    16.30    8.79    1.76    1.12        43.60    21.10    28.67    30.98    0.55        46.94    25.50    22.44    30.38    0.98        4.33    31.60    3.38    31.07    1.73        35.53    15.10    14.28    17.41    2.32        24.88    66.10    26.05    0.76    0.75        338.68    53.20    33.52    88.79    0.51
    2/21/20    1.68    12.40    7.45    42.12    1.39        24.60    74.80    46.10    39.21    1.81        88.80    18.50    14.25    2.10    0.87        27.41    16.30    8.79    1.76    1.12        43.45    21.10    28.67    30.98    0.55        46.02    25.00    22.44    30.38    0.98        4.25    31.00    3.38    31.07    1.73        35.54    15.10    14.28    17.41    2.32        25.06    66.60    26.05    0.76    0.75        336.40    52.90    33.52    88.79    0.51
    2/24/20    1.59    12.70    7.45    130.60    1.39        24.03    73.10    46.10    39.21    1.81        87.99    18.30    14.25    2.10    0.87        27.11    16.10    8.79    1.76    1.12        42.65    20.70    28.67    30.98    0.55        44.13    24.00    22.44    30.38    0.98        4.04    29.50    3.38    31.07    1.73        33.78    14.30    14.28    17.41    2.32        24.14    64.20    26.05    0.76    0.75        325.46    51.10    33.52    88.79    0.51
    2/25/20    1.61    12.90    7.45    130.60    1.39        24.29    73.90    46.10    39.21    1.81        86.80    18.00    14.25    2.10    0.87        26.80    15.90    8.79    1.76    1.12        41.85    20.70    28.67    30.98    0.55        42.55    23.10    22.44    30.38    0.98        3.90    28.50    3.38    31.07    1.73        32.60    13.80    14.28    17.41    2.32        23.18    61.60    26.05    0.76    0.75        324.00    50.90    33.52    88.79    0.51
    2/26/20    1.57    12.50    7.45    130.60    1.39        23.08    70.20    46.10    39.21    1.81        85.35    17.70    14.25    2.10    0.87        26.24    15.60    8.79    1.76    1.12        40.73    20.10    28.67    30.98    0.55        42.41    23.00    22.44    30.38    0.98        3.79    27.70    3.38    31.07    1.73        31.51    17.60    14.28    17.41    2.32        21.50    69.00    26.05    0.76    0.75        310.59    48.80    33.52    88.79    0.51
    2/27/20    1.57    12.50    7.45    130.60    1.39        23.83    72.50    46.10    39.21    1.81        84.43    17.60    14.25    2.10    0.87        25.89    15.40    8.79    1.76    1.12        40.22    19.90    28.67    30.98    0.55        41.86    22.70    22.44    30.38    0.98        3.71    27.10    3.38    31
Answered Same Day May 27, 2021

Solution

Kushal answered on May 30 2021
139 Votes
Question 1
Portfolio Creation –
We cu
ently have 5 different sectors and in order to ensure that we maximize the diversification benefits, we will have to select one stock from each sector. In order to do this, we will make sure that the comparison of the stocks has been done within the sector and not across the sectors. We will stick to the fundamentals in order to choose the right firm for the portfolio.
Stock picking –
Sector - CONSUMER STAPLES -EDUCATION -Child Care & Family Services
Company – IDP Education
We have chosen this company, since this company has been providing very high returns on equity as compared to the other stock that is G8 education. Even though the systematic risk of the firm is on the higher side, the debt to equity ratio is lesser. Over the given period in the data, we have seen that the IDP has been outperforming its peer dearly.
Sector - FINANCIALS - BANKING
Company – NATIONAL AUS.BANK
In the banking sector, we choose this company since this firm, has been underpriced as compared to the Commonwealth Bank of Australia. The riskiness of the firm is not that differentiating.
Sector - CONSUMER STAPLES - RETAIL
Company – WOOLWORTHS GROUP
The firm has been providing higher returns on the equity. On top of this, the systematic risk for the firm has been significantly on the lower side and this will help us keep the portfolio risk as low as possible.
Sector - CONSUMER SERVICE(DISCRETIONARY)-HOSPITALITY
Company – STAR ENTERTAINMENT GROUP
This has been a really high risk sector since the inherent risk in the industry is very high. This sector provides higher risk and returns and this should be a part of out portfolio. The risk of this firm as compared to flight traveler is on the lower side and due to this reason it makes sense for us to keep this stock in our portfolio. The stock has performed better as compared to flight as well in the last year.
Sector - HEALTH CARE – PHARMACEUTICAL
Company – CSL limited
This firm has been outperforming Clinuvel in all the metric ba
ing debt to equity ratio. For the higher return on equity the firm has lower PE and this tells us that the stock is underpriced.
    CODE
    NAME
    SECTOR
    PE Ratio
    return on equity
    Debt to Equity ratio
    Systematic Risk Beta
    Holding Period Returns
    GEM
    G8 EDUCATION
    CONSUMER STAPLES -EDUCATION -Child Care & Family Services
    13.5
    7.5
    42.1
    1.4
    -50.4%
    IEL
    IDP EDUCATION
    CONSUMER STAPLES-EDUCATION - Commercial Educational Services
    70.0
    46.1
    39.2
    1.8
    -16.1%
    CBA
    COMMONWEALTH BK.OF AUS.
    FINANCIALS - BANKING
    17.0
    14.3
    2.1
    0.9
    -27.8%
    NAB
    NATIONAL AUS.BANK
    FINANCIALS - BANKING
    14.8
    8.8
    1.8
    1.1
    -35.5%
    WOW
    WOOLWORTHS GROUP
    CONSUMER STAPLES - RETAIL
    18.3
    28.7
    31.0
    0.6
    -8.2%
    WES
    WESFARMERS
    CONSUMER STAPLES - ...
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