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FIN 640: Dynamics of Stock and Bond Markets

In order to provide students with an introduction to investment analysis and have them critically evaluate alternatives, you are assigned a short project. You will work on this project daily for four weeks, starting in Module 2, with a final report due in the fifth week of the project (in Module 6).

Using the spreadsheet provided, daily track the following three indicator values for 4 weeks:

· Dow Jones Industrial Average (DJIA)

· NASDAQ Index

· 10-year Treasury Note Yield (10-Yr T-Note Yield)

Also during that time you should look for causative factors that impact the value of each of these values. You will get the majority of your information on pages C1 and C2 of the Wall Street Journal (WSJ).

NOTE: You may choose to get a daily subscription to the Wall Street Journal in order to make your research easier. You can order a student subscription at http://student.wsj.com/info or access it through the SNHU Online library. The SNHU Online library version does not include images, diagrams or graphs.

You report will analyze the following:

· The impact of the various causative factors on the three indicator values. List each of the causative factors in bulleted form (See the chart provided for this information). For each factor, briefly analyze the nature (positive or negative) and degree (severity) of the impact on each of the three indicators. You must analyze why stocks and bonds values increase or decrease. You may see the “Credit Markets” section of Section C of the WSJ for causative factors of the bond markets. Also see pages C1 and C2 of the WSJ for other causative factors for the DJIA and NASDAQ.

· The relationship between the three values. Describe the relationship you find between each of the indicator values. Be sure to compare each with the other two. Calculate the correlation coefficient between:

· The DJIA and NASDAQ index

· DJIA and the 10-Yr T-Note Yield

· NASDAQ and the 10-Yr T-Note Yield

Present this information in the table provided. Finally, interpret the coefficients and provide an analysis of the coefficient values.

· Your learnings from your observations. This data should also be presented in bulleted form in the data.

Closing Data: DJIA NASDAQ and 10-Yr T-Note Price

Date

DJIA

% Change

NASDAQ

% Change

10-Yr T-Note Yield

% Change

9/8/14

17,111.42

-0.15%

43.28

+0.37%

2.48

9/9/14

17,013.87

-0.57%

42.95

-0.76%

2.50

9/10/14

17,068.71

+0.32%

43.35

+0.93%

2.54

9/11/14

17,049.00

-0.12%

43.32

-0.06%

2.54

9/12/14

16,987.51

-0.36%

43.86

+1.22%

2.62

9/13/14

9/14/14

9/15/14

17,031.14

+0.26%

43.66

-0.44%

2.60

9/16/14

17,131.97

+0.59%

43.97

+0.71%

2.60

9/17/14

17,156.85

+0.15%

43.86

-0.25%

2.62

9/18/14

17,265.99

+0.64%

43.72

-0.33%

2.63

9/19/14

17,279.74

+0.08%

43.90

+0.42%

2.59

9/20/14

9/21/14

9/22/14

17,172.68

-0.62%

43.25

-1.48%

2.57

9/23/14

17,055.87

-0.68%

42.57

-1.57%

2.54

9/24/14

17,210.06

+0.90%

42.79

+0.52%

2.57

9/25/14

16,945.80

-1.54%

42.00

-1.85%

2.52

9/26/14

17,113.15

+0.99%

42.39

+0.93%

2.54

9/27/14

9/28/14

9/29/14

17,071.22

-0.25%

42.35

-0.09%

2.50

9/30/14

17,042.90

-0.17%

42.42

+0.17%

2.52

10/01/14

16,804.71

-1.40%

41.95

-1.11%

2.42

10/02/14

16,801.05

-0.02%

42.09

+0.33%

2.44

10/03/14

2.45

Causative Factors and Forces Impacting Stock and Bond Markets

Date

Causative Factors

4/12/10

1. Oil price reduces by $1.00 per barrel as OPEC is faces over-production.

2. The Fed reduces discount rate from 2.50% to 2% as inflation fear subsides.

3. Etc….

** Note: The above is provided as an example. Be specific and concrete about the causative factor:

· How much was the increase (or decrease)? From what level to what level?

· Provide information about the magnitude of change makes the statement concrete

· Bullet the information for each day

Correlation Matrix

DJIA

NASDAQ

T-Note Y

DJIA

NASDAQ

-

T-Note Y

-

-

What you learned

Below be specific about what you learned from this activity about the relationships between the markets and the causative events that affect the markets.

Requirements of submission: In order to provide students with an introduction to investment analysis and have them critically evaluate alternatives, you are assigned a short project. You will work on this project daily for four weeks, starting in Module 2, with a final report due in the fifth week of the project (in Module 6). Using the document provided (Dynamics of Stock and Bond Markets.doc), daily track the following three indicator values for 4 weeks: Dow Jones Industrial Average (DJIA); NASDAQ Index; and the 10-year Treasury Note Yield (10-Yr T-Note Yield). You report will analyze the impact of the various causative factors on the three indicator values and the relationship between the three values. Additionally, you will interpret the coefficients and provide an analysis of the coefficient values. Lastly, you will provide a brief on what you have learned from your observations. This data should also be presented in bulleted form in the data.

Rubric

Critical Elements

Exemplary

Proficient

Needs Improvement

Not Evident

Value

Inquiry and Analysis

Explores multiple issues through extensive collection and in-depth analysis of evidence to make informed conclusions

(27-30)

Explores some issues through collection and in-depth analysis of evidence to make informed conclusions

(24-26)

Explores minimal issues through collection and analysis of evidence to make informed conclusions

(21-23)

Does not explore issues through collection and analysis of evidence and does not make informed conclusions

(0-20)

30

Integrative Learning

Makes simple connections among ideas and experiences to effectively synthesize and transfer learning to new, complex situations

(27-30)

Makes simple connections among ideas and experiences to synthesize and transfer learning to new, complex situations

(24-26)

Makes simple connections among ideas and experiences to synthesize learning

(21-23)

Is not able to make simple connections among ideas and experiences to synthesize learning

(0-20)

30

Problem Solving

Effectively designs, evaluates, and implements a strategy to answer an open-ended question or achieve a desired goal

(27-30)

Designs, evaluates, and implements a strategy with moderate effectiveness to answer an open-ended question or achieve a desired goal

(24-26)

Designs and evaluates a strategy to answer an open-ended question or achieve a desired goal

(21-23)

Is not able to design, evaluate, and implement a strategy to answer an open-ended question or achieve a desired goal

(0-20)

30

Writing

(Mechanics/Citations)

No errors related to organization, grammar and style, and citations

(9-10)

Minor errors related to organization, grammar and style, and citations

(8)

Some errors related to organization, grammar and style, and citations

(7)

Major errors related to organization, grammar and style, and citations

(0-6)

10

Earned Total:

Comments:

100

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