RM Investments Investments- Fall 2005 Marshall Blake Rachel Swartzbaugh.

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Presentation transcript:

RM Investments Investments- Fall 2005 Marshall Blake Rachel Swartzbaugh

Outline Allocations Allocations RM Index vs. S&P 500 RM Index vs. S&P 500 Ratios Ratios Expected Returns and Betas Expected Returns and Betas Correlations Correlations Efficient Portfolio Efficient Portfolio Conclusion Conclusion

Diversification 1. Exxon Mobile (XOM) 2. Texas Utilities (TXU) 3. United Health Group (UNH) 4. AstraZeneca plc (AZN) 5. Time Warner (TWTC) 6. AT& T (T) 7. Citigroup ( C) 8. Washington Mutual (WM) 9. Chicago Bridge & Iron (CBI) 10. Jacobs Engineering Group Inc. (JEC) 11. Martha Stewart (MS0) 12. TRX Inc (TRXI)

Sector Allocations

Asset Allocation

Market Trend (Sept-Nov) Note: Index Multiplier was 8E-04

Ratios P/EPrice/Book ProfitDividendQtrly Earnings Ratio BetaMarginYieldGrowth Rate XOM %1.90%74.60% TXU %1.60%-15.70% UNH %0.02%20.60% AZN %2.20%1.00% TWTCN/A %0.00%-2.50% T %5.10%-1.70% C %3.60%34.60% WM %4.50%21.80% CBI %0.40%327.00% JEC %0.00%40.40% MSO %0.00%30.00% TRXI %0.00%29.70%

Using Historical Data (past 5 years) S&P 500 Portfolio(Oct.)Portfolio(Dec.) E (r ) E (r )2.37%1.30%1.95% Beta

CAPM

CAPM Risk Free Rate= 4.02% Return of Market= 2.37% Portfolio’s E ( r)=2.41% What was expected of portfolio is higher than market’s return.

Correlations XOMTXUUNHAZNTWTCTCWMCBIJECMSO XOM1 TXU UNH AZN TWTC T C WM CBI JEC MSO

Efficient Portfolio

RM Investments Conclusion A low-risk portfolio A low-risk portfolio Diversified Diversified Not as efficient as could be Not as efficient as could be Relatively stable compared with S&P 500 Relatively stable compared with S&P 500 Remember RM Investments!