1Assignment Guidelines and Rubric.
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:1) 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)Daxter International, Inc. (BAX)Big Lots, Inc. (BIG)Netflix, Inc. (NFLX)Akamai Technologies, Inc. (AKAM)General Electric Company (GE)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.
2) 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