Stock Screening

 

Stock Screening

 

Read Section 3.5 on Stock Screening. At the end of Chapter 3, complete the activity Apply Your Knowledge: Stock Screening. In a two-page paper (not including the title
and reference pages) you must: Define stock screening in your own words. Cite your source for this. Develop a list of five criteria for activist stock screening. These
might include social, political, or environmental issues that are meaningful to you, such as child labor, solar energy, or compliance with certain government
regulations. Summarize the stock screening procedure citing your sources. You must use at least one scholarly source in addition to the text and your paper must be
formatted according to APA style guidelines as outlined in the Ashford Writing Center. Note: Title must appear on the first page of text; headings must be used in all
APA essays; and, the final heading of your paper must be the word: Conclusion. Contact your instructor if you have any questions regarding proper formatting. Carefully
review the Grading Rubric (Links to an external site.)Links to an external site. for the criteria that will be used to evaluate your assignment. Stock Screening
Another way stockholders try to exert influence over corporate governance is through stock screening. Socially responsible investing (SRI) describes investors who
choose stocks based on environmental or social issues. SRI allows investors to reward firms that sell products they admire (environmentally conscious investors might
be attracted to solar start-ups, for example) or punish firms that sell products of which they disapprove (so-called sin stocks traditionally include alcohol
producers, gun manufacturers, and tobacco companies). A growing number of professionally managed funds also have social filters to help select companies that deserve
investment. A socially responsible investment fund might screen out companies that have an excessive impact on the environment, overpay executives, or have a history
of discriminating against employees. Socially responsible investors can be as varied as the number of fund managers and the causes they espouse, but estimates suggest
that when screening and selection strategies are considered, more than 1 of every 9 dollars under investment is invested in an SRI fund; the total size of the SRI
market is in excess of $4 trillion (Forum for Sustainable and Responsible Investment, 2016). This fact means that social responsibility concerns have become mainstream
enough to affect Wall Street; it also means that socially responsible and sustainable firms looking to attract capital can identify themselves with the SRI movement.
Stock screening is a kind of social activism that has an indirect impact on board decisions, but it may have a direct impact on a stock′s price and value. Many
companies have initiated social responsibility resolutions to guide corporate decisions in the hopes that such moves will increase the value of shares to certain
investors. Apply Your Knowledge: Stock Screening Develop a list of five criteria for activist stock screening. These might include social, political, or environmental
issues that are meaningful to you, such as child labor, solar energy, or compliance with certain government regulations. Then, list 20 commonly traded stocks from the
New York Stock Exchange: https://www.nyse.com/index. Research event information for each stock, paying close attention to their products, or management processes, and
how they do business. Rank the stocks based on their compliance with the stock screening criteria developed. Based on your activist portfolio, select which of the
stocks you would purchase. Then determine what portion of your portfolio each selected stock should constitute. For example, you may choose one particularly positive
stock to be 50% of your portfolio while some mix of other stocks will represent the other 50%.

 

 

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