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Guidance on FE coursework
1. Structure
• A brief introduction (on the selected company etc.)
• The CAPM, data, estimation results (needs to be accurate and precise)
• Other supporting evidence (this section is quite open)
o As the CAPM focuses on the systematic market risk, perhaps the
other supporting evidence would focus on 1) other systematic risk
(such as the liquidity risk), nonsystematic risk, or no risk at all
o It can cover the macro-economy, business cycle, industry, financial
statements and ratios, the management team, and the list goes on
• Recommendation
o The Chinese investor is in her mid-30’s and has no stock in her
asset portfolio. Assumptions on her profile need to be reasonable,
e.g, stable income and job, modest savings for investment, etc.
2. Data and estimation
• Summarize the data (mean, standard deviation, skewness, kurtosis,
autocorrelation, etc.)
• Explain (in a few sentences) why you choose the particular data frequency
and sample period
• Explain (in a few sentences) why you choose the particular stock index
• Discuss the regression results and their financial interpretation
3. Miscellaneous issues
• 1500 words is not the target; a well-written essay of 1200~1300 words
would be just as nice
• No need to provide many references, as the coursework is an application
of the CAPM followed by your own analysis
• Whether you recommend the stock or do not recommend the stock will not
affect the grade
• No need to append the data to the coursework