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Business Cycles and Economic Outlook: Purchase of Coca Cola

1. Today how many Coca Cola Company shares can you purchase with $1000 even if the brokerage fee is waived?

2. From mid-APR 10 to now, how many Coca Cola shares you have and multiply by the current stock price. Did it go up, down or remain the same?

3. What were some major factors seem to affect the growth of Coca Cola stocks?

4. How do you think the Coca Cola stock will do in another five years (2014)?

5. What are some economic factors that would affect Coca Cola stock (i.e. new technology, trends, etc.)?

6. Give some insight as to possible returns from investing in the Coca Cola stock market.
a) Keep in mind that the risk-reward dynamic is a little more volatile in the stock market than it is in other alternatives.
b) Compare stock market investments to other alternatives.
c) What are some of the opportunity costs of investing the $1000 in the DOW 30? d) what other ways the $1000 could be invested).

Solution Preview

1. Coca Cola (NYSE:KO) is trading at 53.34 (Close of Friday May 14th). So $1000 would allow you to purchase 18 shares, and have 39.88 left over if brokerage fee is waived.

2. Mid April price of KO is roughly between $54 to $55, so it went down slightly.

From here on, the questions gets extremely subjective, what I am writing is not necessarily the only correct answer, I am simply offering my opinion.

3. First we should assume that there isn't a great chance in demand for soft drinks since the past month. We should also note that no fundamental effects (e.g. Coca Cola didn't announce a big loss since the last quarter) have affected their share price. Having that said, the only reason that affected the share price is general market trend. You should know that KO is only of the Dow 30 ...