...Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments FIN 550 Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments FIN 550 Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments FIN 550 Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments FIN 550 Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments FIN 550 Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments FIN 550 Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments FIN 550 Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments FIN 550 Assignment 2: High Risk Investments http://hwguiders.com/downloads/fin-550-assignment-2-high-risk-investments/ FIN 550 Assignment 2: High Risk Investments ...
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...| Alternative Investment Project | | | | | | | | Content Page: Content | Page | Cover Page | 1 | Content Page | 2 | Executive Summary | 3 | Introduction | 3 | Content of Project | 4 | Conclusion | 9 | Recommendation | 9 | Appendix | 10 | Assignments of work | 19 | Executive Summary: The purpose of the report is to do an in-depth investigation, study and analysis on alternative investments. From the various alternative investments, our team of analyst chose commodities, variable annuities and hedge funds as our subject of interest for the study. Each financial product has its own aims as to cater to the different investment goals to meet the needs of investors. Thus, just by looking at the basis on expensiveness and tax-efficiency, and then from selecting the better one is unwise. We have to look at the overall picture and considering other indispensable factors like risks, liquidity, asset allocation which are equally important. Therefore, our basis of evaluation comprises of various important factors so as to make a robust analysis. Firstly, commodities are a highly demanded investment which is traded using options and futures contract.. Moreover, they are also an element of diversification that investors can lower their vulnerability to market volatility. Despite its high volatility in its prices, it managed to gain a higher return as compared to stocks and bonds. As commodities have a low correlation with bonds...
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...in the investment world; when he talks – the market follows. This is noticeably seen in the increase in equity of $718 million. ------------------------------------------------- Question 2: GEICO Outstanding shares April 30, 1995: 67.89 million, of which 34.22 million owned and 33.67 million purchased at $70; total price $2.3 billion. A Capital Asset Pricing Model (CAPM) derived cost of equity equaled 10.99% percent via a risk-free rate of 6.86 percent, a beta of 0.75, and an equity risk premium of 5.5 percent. k = 6.86 + 0.75 ((5.5)) = 10.99% Using Value Line’s forecast & the above discount rate and share information: the following low end & high end NPV are calculated: Low end: -$335.57 High end: $389.89 For methodology in calculation of intrinsic value refer to ‘1995-Question 2’ in the accompanying “excel“spreadsheet for the analysis. Using Value lines cost of equity; the investment yields a negative Net Present Value (NPV) on the low end. The investment will not add value to the firm and the acquisition of GEICO doesn’t seem to be a good one. The high end range yields a positive NPV showing the investment rather is rather a prudent one. The discount rate used is highly subjective and is influenced by the risk premiums chosen by the analyst. If we increase the risk premium on the cost of equity we will see negative NPV for both the high and low end range; finding the investment unsuitable. Buffett calculated the intrinsic value using the risk free rate...
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...Case Study 1 NPV: Of all the investment appraisal methods, NPV is often argued to be the most superior. This is because it takes into account the time value of money. The method assumes that a dollar today is worth more than a dollar this time next year. It works under the assumption that if one is owed a dollar and the borrower offers a choice of either giving the dollar now or in a year’s time, the more rational option for the lender is to take the dollar now. Provided the lender does not keep the dollar under his mattress at home, it will be worth more than a dollar in a year’s time. It stresses that future cash flows should be expressed in terms of what they are worth now when cash is expended on the project. The present values of these future cash flows can then be compared with what we are spending now on the project. When present values of cash outflows and inflows are compared, if the result gives a positive NPV, then the project should be recommended. In a mutually exclusive situation, that is, when you can only undertake one project and not two projects at the same time, if two projects were to give positive NPVs, then the project with the higher NPV is the one to recommend. In case of Goodweek tires, Inc. we would only consider the relevant costs and not the sunk costs. The sunk costs would represent costs that would have been incurred regardless of what decision would be taken. These are the initial market study costs etc. The NPV of the project is negative...
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...the financial markets. This article introduces some of the most important concerns in the world of investment. Your Objectives Let’s start with your objectives. While clearly the goal is to make more money, there are 3 specific reasons institutions, professionals and retail investors (people like you and me) invest: For Security, ie for protection against inflation or market crashes For Income, ie to receive regular income from their investments For Growth, ie for long-term growth in the value of their investments Investments are generally structured to focus on one or other of these objectives, and investment professionals (such as fund managers) spend a lot of time balancing these competing objectives. With a little bit of education and time, you can do almost the same thing yourself. Knowing Yourself – Your Risk Profile One of the first questions to ask yourself is how much risk you’re comfortable with. To put it more plainly: how much money are you prepared to lose? Your risk tolerance level depends on your personality, experiences, number of dependents, age, level of financial knowledge and several other factors. Investment advisors measure your risk tolerance level so they can classify you by risk profile (eg, ‘Conservative’, ‘Moderate’, ‘Aggressive’) and recommend the appropriate investment portfolio (explained below). However, understanding your personal risk tolerance level is necessary for you too, especially with something as important as your own money...
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...Beyoncé’s risk investment | AbstractA case study which taps into the high risk investment the American singer Beyoncé took to produce her fifth album in a non-traditional way. Reine Kolle (瑞丽) Student ID: 1120150914 | Beyoncé’s risk investment | AbstractA case study which taps into the high risk investment the American singer Beyoncé took to produce her fifth album in a non-traditional way. Reine Kolle (瑞丽) Student ID: 1120150914 | Beyoncé’s Risky Investment Overview As part of our curriculum education we were asked to find a short case study that we thought to be of an interest in investments. Thus, this paper will discuss concisely the Harvard case study; written by Anita Elberse and Stacie Smith (2014), on the American singer Beyoncé and how much of a business gamble her project really was. The reason I find this case to be of interest is because of its depth into risky decision making and the uncertainty of expected results in investment. The approach of this case study is an analytical approach. This approach does not identify problems but it examines the case in order to understand what has happened and why. Key word: risk-return tradeoff Case study In December 2013, music superstar Beyoncé is about to surprise her fans with the release of her self-titled album. The team at her company Parkwood Entertainment, which general manager Lee Anne Callahan-Longo described as "a management, music, and production company that is owned and at the highest...
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...Executive Summary A significant element of investment management is the mechanisms of alternative investment. A strategic selection of the right asset allocation can provide a means of protection against unsystematic risk, also known as “diversifiable risk”. Though a well-diversified investment portfolio can provide a means of risk minimisation, allocating assets across a varied range of investments through alternative means is essentially the most effective mechanism. A combination of private equity, hedge funds, venture capital, commodities, real estate and art can assist in achieving this objective. Alternative investments were restricted to professional fund managers and large private investors. However, many small investors now have a way to access alternative investments through venture capital, hedge funds and private equities (Brailsford, T 2011). Following the Global Financial Crisis (GFC), investors shifted capital into lower risk investments. Some financial institutions and individual investors preferred to place a large percentage of their capital into lower risk products such as commercial papers and treasury notes. However, others believe that such events provides a good opportunity to invest their capital into higher risk instruments in order to gain greater returns in the mid-to long-term. The core principles of investment is the diversification of assets to minimise risks. Therefore, alternative investments plays a pivotal role in broadening the selection...
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...within common and preferred stock. Debt is used as a form of leverage to ultimately increase the overall return on an investment. The more debt and equity, capital structure, that a firm has, the more leverage it will have. By using debt, a company can increase its leverage because it can invest in business operations without increasing its overall equity. It also helps the investor and the firm to operate, but increases the added risk of default upon the firm. In the long run, leverage magnifies the overall losses and gains. The return on an investment is vital when analyzing which projects should be accepted or rejected. Return on investment measures the performance of a project that evaluates the efficiency, or compares the efficiency and performance of different projects. Evaluating return can be modified to fit the specific situation, depending on the returns and costs associated with the projects. The downfall with critiquing or manipulating the return on investment calculation is that the overall result can be expressed and translated in different contexts. The higher the ROI, the better because it will add more value for the firm and potential investors will be inclined to participate in the project due to the high magnitude of returns they foresee in the future. Atlas Metals Company Investment Overview Atlas Metal has different investment projects that need to be analyzed, service center facility, a new prototyping device, and company routine projects. ...
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...Question #1 Cloudy High-Yield Hedge Strategies and Cloudy Real Estate All Stars would be considered as alternative investments, according to the standards issued by AICPA. Typically, great examples of types of alternative investments are common/collective trusts, pooled separate accounts, stable value investments, private equity funds, hedge funds, real estate funds and etc. Because these funds have higher risk-return structure than normal index bonds, they are in the most of the time illiquid investments which will also have restrictions on the ownership transfer. Hedge funds are regularly engaged in aggressive strategies which can involve highly leveraged trading of derivatives; hence in this case, Cloudy High-Yield Hedge Strategies is definitely one type of alternative investment. Real Estate funds depend on the performance of the real estate market and real estate goes through private transactions instead of going national exchanges or over-the-counter market. In that sense, Cloudy Real Estate All Stars is another alternative investment. The notion behind benefit plans engaging in alternative investments is to try to diversify the investment strategy and at the same time, reach to a high overall return of the portfolio. But in terms of valuing these alternative investment strategies, it normally encompasses a wide range of methods. Since the NAV and shares held are provided by the Union, it might be more accurate for the engagement team to conduct further investigation on...
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...Regular Features Hotels Hotel investment risk: What are the chances? Received (in revised form): 7 November 2006 Elie Younes was, at the time of writing, a Director with HVS International’s London office, heading the Middle East and Africa region together with Bernard Forster. He joined HVS International in 2001 having had four years’ operational and managerial experience in the hospitality industry in the Middle East. He holds a BA in Hospitality Management from Notre Dame University in Lebanon, an MBA from IMHI (Essec Business School, France and Cornell University, USA) and is currently preparing his MSc in Real Estate Investment at Cass Business School in London. He has now joined Starwood Hotels and Resorts’ Acquisition & Development team. Russell Kett is Managing Director of the London office of HVS International. He has some 30 years’ specialist hotel consultancy, investment and real estate experience and generally focuses on the provision of valuation, feasibility, shared ownership, property, brokerage, investment, asset management, strategy and related consultancy services, advising hotel companies, financial institutions, developers and investors on all aspects of their hospitality industry-related interests, throughout Europe, the Middle East, Africa and Asia. He is a frequent speaker on the international hotel industry and on topics relating especially to the valuation of and investment in hotels, marketing, resorts and shared ownership, as well as on the hospitality...
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...How to find the right investment for you Investment has become a hot topic in the Philippines lately due to the plethora of positive economic news: the recent Fitch credit upgrade, the stock market hitting high after high, and the real estate boom. It seems to make perfect sense to start putting your money to work, but how to choose the right investment? With so many financial instruments out there, it's quite difficult to decide. So before sinking your hard-earned savings into any investment, take a few moments to consider these questions. What are you investing for? In the rush to make money, it's easy to overlook this most basic of steps: thinking up a clear financial goal. Putting your money in any instrument without deciding where you want to go with it is like going on a roadtrip with no destination in mind—you and your money could wind up just about anywhere, and rarely the place you want to be at. So decide: is your money for emergency funds? Is it savings for a big purchase, like a car or a home? Is it for your children's future, or your own retirement? Are you building a business? What kind of lifestyle do you want to create for yourself? Whatever your goal is, it certainly carries a price tag. Take time to determine that amount as it will save you a lot of trouble later on. The clearer you are about what you want, the easier it is to realize it. How long do you need to invest? This is a follow-up question to your financial goal: determining your...
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...Investment Management i) The term investment refers to funds invested in various securities — consisting of Government and semi Govt. securities, loans, debentures, shares and bonds etc. ❖ Elements of Investment :- a) Reward (Return) b) Risk and Return c) Time ❖ Nature of Investment :- Investment requires a continuous flow of decisions which can not be avoided. The investment decisions are based on many streams of data which taken together, represent to an investor the observable environment and the general and particular of the securities & enterprises in which he may invest. ❖ Investment Environment :- a) Stable Government b) Stable Currency c) Presence of Public financial Institutions d) Development of corporate sector. [pic] ❖ Different types of Port-folios for Investment :- Investment — Concept of Port-folio :- Portfolio is the collection of financial or real assets such as equity shares or debentures, bonds, treasury bills & property etc. Steps in selecting a portfolio a) framing of investment policies. b) Valuation of Financial Instruments c) Investment Analysis d) Construction of Portfolio Port-folio management is the investment of funds in different securities in which total risk of the port-folio is minimized while expecting maximum return form it. ❖ Port-folio construction :- i) Determination of Diversification...
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...GEST-S411 Investments in a historical perspective Building a Bond Portfolio Vitalij Aleksandrov Gerard Haughey CONTENTS ➢ PART 1 ❖ What are bonds? ❖ What types of bonds exist ❖ Tools of analysis ➢ PART 2 ❖ Characteristics of a good bond portfolio ❖ Choosing a portfolio strategy ❖ Management of a bond portfolio ➢ PART 3 ❖ Creation of our portfolio ❖ Selection of bonds ▪ Analysis of issuer ▪ Technical analysis ▪ Expectations (including risks) ▪ Investment decision ❖ Investment summary ❖ Performance analysis ❖ Effects of crisis on the bonds chosen ➢ BIBLIOGRAPHY PART 1 What are bonds? In the same way that people borrow money, companies and governments also need to borrow money. A company needs to fund its expansion, conduct market research, develop new products etc., and the problem large corporations encounter is that they need more money than any single bank can provide. This is particularly the case with governments who need to fund everything from infrastructural projects to securing bank loans. Because they can’t borrow large sums from banks they must turn to the public market and raise money by issuing bonds. A bond is a fixed income security or a loan given by the bondholders (individual investors) to the issuer...
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...Zeus Asset Management Inc. Harvard Case Solution & Analysis QUESTION 1 ZEUS’s INVESTMENT PHILOSOPHY The investment philosophy of the management of Zeus is based on the fact that the results of the investment or the return over the investment could be only achieved over the years by following a risk averse and conservative approach to the management of the risk. This ensures that the portfolio manager of the company works hard to deliver the best performance that is relatively the same as compared to the benchmark’s performance. The equity fund seeks for growth which is for the long term, when the earnings from the stocks are expected to grow above average rates. ZEUS’s PRIMARY INVESTORS The primary investors of Zeus consist of both the individuals and the institutional investors. The institutional investors come from corporations, endowments and foundations. On the other hand, the individual investors consist of high net worth and the risk averse investors that want to invest their assets for long periods and achieve growth. INDIVIDUALLY MANAGED ACCOUNTS & MUTUAL FUNDS The minimum requirement for the individually managed accounts is $ 2 million. Zeus used to customize the portfolios for these clients according to the investment objectives of these clients and afterwards it balanced the volatility and the time horizon of these investments. For other types of people or groups that did not have the minimum capital requirement, then these individuals could invest...
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...Subject: Portfolio Selection and Investment Strategy According to risk and yield, as well as detailed assessment, I have chosen 4 lots. I noticed the proper mineralization of the risk yields, also accounting for diversification of the portfolio. This reduces the danger which may come with certain risk factors. In order to get particular organization information, it was essential to get proper information on the profile. Some of these shares incorporated are Western Connect Air, Infoway Computers, Transcondit Inc., Deskop Inc., and One Voice Telecom. In order to have the best yield possible for Casta Bonita Ceramics, the best strategy must be used. With lack of investing in high stock yields, it is important to make correct and simple decisions when it comes to correct and proper investment potential outcomes. A diverse portfolio is important to consider when making proper implication investment strategies. Although high risk is to be considered, Infoway, Tasconduit, and One Voice offer high yields as well. These types of shares are in the Information Technology and Telecommunications Industry. I have Chosen Infoway above the other two for various reasons. The company seems to be progressing better and more progressive and seems to have a better record than the other two organizations. Considering the beta and risk of each high risk stock, I have decided to go with Infoway Inc. Western Connect Airlines was not sensible since it had a higher risk compared to Leviathan Defense...
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