FIN 340 Module Six Journal Guidelines and Rubric
Overview
This journal activity is private between you and the instructor. This assignment will allow you to assess the impact of news on stocks and bonds. News can affect stock and bond prices in significant ways. This is because news disseminates into the market at different speeds and with different levels of importance. As investors, you need to think about how information flows through market participants and into securities. Surprise news can jolt the market up or down, whereas gradual dissemination can result in a slow buildup or deterioration in prices/yields. Additionally, market participants sometimes build expectations beforehand, and prices react differently than people expected because the news did not meet or exceed expectations. All of these dynamics can supply important information to apply to an investor’s portfolio decisions.
Prompt
Complete both of the following scenarios:
Choose a stock from list below:
International Business Machines Corporation (IBM)
The Coca-Cola Company (KO)
Bristol-Myers Squibb Company (BMY)
Oracle Corporation (ORCL)
3M Company (MMM)
Baxter International, Inc. (BAX)
Big Lots, Inc. (BIG)
Netflix, Inc. (NFLX)
Akamai Technologies, Inc. (AKAM)
Then, go to Yahoo! Finance or another website and find a news article that you believe would impact the company’s stock price.
Calculate the return of the chosen stock for:
The two weeks prior to the news
The day of the news
The two weeks after the news
Explain how the actual impact of the news on the stock price aligned with your initial expectation after reading the news article.
Choose a significant economic report (unemployment, GDP, etc.) or Federal Reserve Open Market Committee announcement.
Then, use Yahoo! Finance to research the historical pricing of the CBOE 10 year treasury yield (symbol: ^TNX). Calculate the percentage change for:
The 2 weeks prior to the news
The day of the news
The 2 weeks after the news
Explain how the actual impact of the news on the bond yield aligned with your initial expectation after reading the news article. Be sure to show your work to get full credit for these calculations.
Specifically the following critical elements must be addressed:
Calculate the return of the chosen stock for the two weeks prior to the news, the day of the news, and the two weeks after the news. Show your work to support your response.
Explain whether the news article had the impact on the stock price that you expected.
Calculate the percentage change of the CBOE 10 year treasury yield for the two weeks prior to the news, the day of the news, and the two weeks after the news. Show your work to support your response.
Explain how the actual impact of the news on the bond yield aligned with your initial expectation after reading the news article.
What to Submit
Your journal assignment should be two to three paragraphs in length and address all of the critical elements. It should also cite at least two sources using APA format. Consider utilizing the required readings, as well as recent news articles. Submit journal assignment as a Word document.
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