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QUESTION

Using the SP Analysts' handbook or other source, plot the last ten (10) years history of the Operating Profit margin of the SP Industrials Index,

Using the S&P Analysts’ handbook or other source, plot the last ten (10) years history of the Operating Profit margin of the S&P Industrials Index, or other aggregate market series, and that of the industry which represents the largest component of your portfolio. Calculate the correlation coefficient. Determine the nature of the correlation between the two (2) series.2.Prepare a table listing the variables that influence the earnings multiplier for your chosen industry and the market index series for the most recent ten (10) years. Determine whether or not the average dividend-payout ratios for your industry and the market index differ. Show how the dividend payout influences the difference between the multipliers.3.Calculate the industry beta using monthly data for five (5) years. Based on the fundamental factors and the computed systematic risk, show how this industry’s risk compares to that of the market. Indicate the effect this difference in risk will have on the industry multiplier relative to the market multiplier.4.Analyze the different components of growth (retention rate, total asset turnover, total assets / equity, and profit margin) for your chosen industry and a market index during the most recent ten (10) years. Based on this analysis, show how you would expect the growth rate for your industry to compare with the growth rate for the market index. Then, show how this difference in expected growth would affect the multiplier.

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