...Following is a likely solution for Mr.Chintamani. Genarally as a thumb rule 1.exposure to equity and/or M.F. should be (100 minus age)% of investable amount (after expenses if any) 2.Sum assured for insurance should be aproximately 10 times of annual expenses. So in this case the Sum assured should not be less than Rs.20,00,000/- present premiums of term insurance of sum assured 20 lacs. are for a male of 1. 25 years old is around Rs.2500 p.a. 2.35 years old is around Rs.3500 p.a. Making same premium amounts for health insurance would earn a health cover of Rs.2-3lacs. for him. @25 years TOTAL INVESTABLE AMOUNT after insurance expenses (50000-2500-2500)=Rs.45000p.a. investment term (55-25)=30years equity and/or M.F exposure (100-25)=75% Allocating 37.5% into equity and 37.5% into M.F. Equity amount to be invested 37.5%*45000= Rs.16875 Using compound interest formula for equal installments. A=P*({1+r}^n-1)/r r=rate of return. n= number of years. P=annual investment amount. A=total amount at end of "n" years. For equity n=30,r=0.15,P=16875. A=16875*({1+0.15}^30)/0.15 A=Rs.7,33,63,324 ............a * risk factor=16875/50000*100*5=168.75 Similarly for M.F. n-30,r=.12,P=16875. A=Rs.40,72,489................b * risk factor=16875/50000*100*4=135 Now amout that is left out of investable 45000 is 11250. equally allocating 11250 amongst bank f.d and gold means 5625. Gold ...
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...An investor’s portfolio is simply their collection of investment assets. Once the portfolio is established, it is updated by selling existing securities using the proceeds to buy new securities, by investing additional funds to increase the overall size of the portfolio, or by selling securities to decrease the size of the portfolio. Investment assets can be categorized into broad asset classes, such as stocks, bonds, real estate, commodities, and so on. Investors make two types of decisions in constructing their portfolios. The asset allocation decision is the choice among these broad asset classes, while security selection decision is the choice of which particular securities to hold within each asset class. You may choose to invest your savings in safe assets, risky assets or a combination of both. It is important to invest in order to be able to retire in the distant future. The earlier you start investing and the more you invest the more money you will have to be able to retire. Since social security is not a guarantee for many of us in the future, it is now more important than ever to invest and to know how and where to invest your money. There are many of other ways to invest money other than common stock. Since this is the only type Judd knows of, the investment class would be a very good choice for him. Another way to invest your money is bonds. A bond is a security issued by a borrower that obligates the issuer to make specified payment to the holder over...
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...Formula Sheet for Investment Analysis 1. Buying on Margin. Margin Percentage = (market value of assets purchased minus amount of loan) / (market value of assets purchased) MP = ((shares * price) – loan) / (shares * price) 2. Going Short. Margin Percentage = ((cash from short sale + collateral) – (shares borrowed * market price)) / (shares borrowed * market price) MP = ((shares * price) + T-Bills) – (shares * price)) / (shares borrowed * price) 3. Net Asset Value. NAV = (market value of assets – fund liabilities) / # of shares outstanding. 4. Return on a Mutual Fund. ($1 * (1-load)) * (1+(r-f)) r = return on fund f = fees. load = front-end load for A share; otherwise load = 0. 5. One Risky Asset and One Risk-Free Asset. E(rc) = rf + y * (E(rp) -- rf). σc = y * σp. 6. Optimal y to Maximize Utility. y* = (E(rp) -- rf) / (A σp2) 7. Single-Factor Model statistics. ri = E(ri) + βim + ei , and m and ei are uncorrelated. σi2 = βi2 σm2 + σ2 (ei) . Cov (ri , rj) = βi βj σm2 . Corr (ri , rj) = (βi βj σm2) / (σi σi) . 8. Single-Index Model statistics. Ri (t) = αi + βi RM (t) + ei (t), M and ei are uncorrelated. σi2 = βi2 σM2 + σ2 (ei) . Cov (ri , rj) = βi βj σM2 . Corr (ri , rj) = (βi βj σM2) / (σi σj) . 9. R2 for Single-Index...
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...World Dialogue on Regulation for Network Economies Regulation and Investment: Case study of Bangladesh Harsha de Silva[1] and Abu Saeed Khan[2] August 2004 Abstract The paper considers the available evidence in determining a relationship, if any, in the Telecom Regulatory Environment [TRE] of Bangladesh and investments in to its telecommunications industry over the last decade. TRE is segmented in to market entry, access to scarce resources, interconnection, tariff regulation and regulation of anti-competitive practices while investments are all non-divestiture foreign and domestic private and public investment. The TRE in Bangladesh is found to be wanting in all defined aspects. Interconnection is the worst of the five components, where a mobile only parallel network is being created due to regulatory ineffectiveness where almost ninety percent of mobile users do not have access to a fixed phone. Investments in to the fixed sector in Bangladesh dominated by the state owned virtual monopoly have been sorely inadequate and continue to be dictated by the funds availability [or lack thereof] of the Government. The mobile sector on the other hand has seen some amount of investments flowing in led by the widely acclaimed GrameenPhone. However, once standardized to compare across the region, it is found, even though using imperfect data to compare, that the reason for this flow could...
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...Beta Management Company | | |Investment Management case study | Table of contents Backgrounds……………………………………………………….……1 Strategies………………………………………………………………...1 Background of California R.E.I.T and Brown Group Inc……………2 Return and risk…………………………………………………….....…2 Summary………………………………………………………………...4 Appendix………………………………………………………………...5 Background: Beta Management Company is a small investment management company based in a Boston suburb founded in 1988. As the company developed, they had roughly 25 million dollars in the 1991. The goal of the company is to enhance returns but reduce risks for clients via market timing. Currently, the company’s funds were invested into the Vanguard 500, an S&P 500 no-load and low-expense index funds (with the reminder in money market instruments). As time goes by, Sarah Wolfe who is the founder of this company think about increasing her equity exposure to 80% with the purchase of individual stock. Strategies: Firstly, Sarah Wolfe uses a market timing strategy based on two portfolios: the Vanguard Index and money market. In order to obtain the capital gains, once the company predicts the market value will rise, it will transfer its assets from the money market to the Index. The limit will up to a maximum 99% of total assets. On the other hand when the company expects the market value will decrease, it...
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...Introduction Dimensional Fund Advisors, further referred to as DFA, is an investment company that bases its strategy mainly on academic research and related theories. They work together with proponents of the efficient market hypothesis, indicating a relatively strong belief in this theory and thus in efficient markets. However DFA also feels that skilled traders have the ability to contribute to a fund’s profits even when the investment is inherently passive and DFA does adjusts its strategy to new findings in the field. In this report we will evaluate the relevance and accuracy of the theories used by DFA, especially the value premium and the size premium where almost all of their funds are based upon. This will lead to comments on the usefulness of these theories to increase the return of DFA’s funds and to recommendations about changes in strategy that will enhance the performance of DFA overall. Performance and strategy so far DFA has performed relatively well over the years, aside from some relatively rough patches in the late 1990s. Growth of the company had been stable and profits high. There was no need to sell shares for liquidity reasons and shares were only sold if they did not fit into a fund anymore. This didn’t happen very often though as DFA had several funds that were “connected”, when a stock in the Micro Cap portfolio grew too big it could be placed into a fund with bigger companies (Small Cap portfolio). An important part of DFA’s strategy,...
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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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...1. How is Yale’s investment philosophy reflected in its strategic asset allocation? Yale’s investment philosophy is one of the critical factors that played into the success of the fund’s performance in the past years. The philosophy is based on 5 principles: focus on equity, diversification, opportunities in inefficient markets, outside managers and alignment of manager’s incentives with Yale’s interests. In the paragraphs below I will discuss how each of these principles is reflected in the endowment’s asset allocation, as shown from Exhibit 1. Yale’s belief in equities is reflected through the endowment’s heavy allocation in equity from 1985-2010. The weight allocation, however, is heavier in the earlier years (1985-1999) than in later years (1999-2010). In the early years, the allocation equity (both domestic and foreign) has been higher than other class assets. From 2000- onwards, allocation to other asset class such as private equity, real assets, and absolute return starting to rise and dominate the asset portfolio. By 2010, the weight of real assets (27.5%), private equity (30.3%), and absolute return (21%) individually are higher than the weight of both equities combined (16.9%). This is not exactly in line with their philosophy focusing on equities. Yale’s second philosophy is diversification to reduce risk by limiting exposure to any single class. This is reflected in their asset allocation over the years. In Exhibit 1, Yale has been consistently investing in 6 asset...
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...STRUCTURE OF THE CASE • Promoters start business in 2008 in the name of XYZ Ltd. They manufacture product A, B and C and are in the consumer electronics manufacturing industry. • They pool capital worth Rs 10 crores from personal sources. This is the promoter’s contribution to the business. Equity shares worth 10 crores were issued to promoters, having face value of Rs 10. Shares were issued at par. The founders thus hold 100,00,000 equity shares in the company owning 100% equity in the business. • In 2012, capital worth 30 crores infused by PE. 20 lakh new shares were issued to PE thus diluting the stake of the promoters from 100% to 83.33%, the PE owning the rest 16.67%.The face value of the Equity Shares of the Company is Rs. 10 each and the Issue Price is 15 times the face value of Equity Shares.The shares were valued as a multiple of 5 times the weighted average EPS for last three years i.e. 2010-2012 considering qualitative factors such as diversified business model and high growth prospects based on valuation of company. The weighted average EPS for 2010-12 is 3 (approx). • Thus shares are issued to PE @ Rs150 per share (EPS 3* 5 times*face value of share 10) • PE investment enables company to raise more loans. The capital thus raised, was also used for advertising and brand building thus increasing the net sales of the company by an average of 60% • Company is raising Debt through Secured Loans hypothecated by company assets as well as Unsecured Loans and a Bank...
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...INTRODUCTION 1.1 BACKGROUND OF THE STUDY Foreign direct investment refers to an investment made by an entity or a company based in a country, into another entity or company that is based in different country. FDI is an investment made to acquire a lasting management interest (normally 10 percent of voting stock) in a business enterprise operating in a country other than that of the investor defined according to residency World Bank (1996). The importance of FDI to developing countries cannot be over stated, it acts as a complement to their locally assembled savings it is accompanied with managerial skills and technology which are key in the development of any economy. A number of studies inspired by Chenery and Syrquin (1975), Ranis (1976),...
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...Kyle Stocker FIN-421 4/7/2014 Rudy Wong: Investment Advisor Rudy Wong, an investment advisor at O’Hagan Securities was in a predicament that caught him in the middle of his clients and the stock market crash of September 2008. In the United States, the Dow Jones Industrial Average had stooped to its lowest level as well as the Toronto Stock Exchange since 2003. This financial crisis led four of Wong’s clients to request urgent meetings regarding their assets and investments. All four were of different gender, age and particular needs which left Wong concerned that they all hold a risk of losing everything. He had to decide the best way to reassure all of his clients by communicating logical arguments based on their portfolios and his expertise, managing their emotions and attempting to re-establish their faith in the market despite its current situation. Wong knew that the outcome of his decisions had a great impact on his professional credibility and the interests of his clients who entrusted their life savings to Wong and O’Hagan Securities. As an investment advisor, it is Wong’s duty to help clients to optimize the allocation of their financial assets that meet the client’s particular needs. He does so by taking into account each clients financial resources and constraints as well as their short and long term goals. They are considered all purpose financial counselors who show the client how they can save money on mortgage payments, their child’s college fund, the...
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...Federal Retirement Thrift Investment Board The Federal Retirement Thrift Investment Board administers the Thrift Savings Plan (TSP), a tax-deferred defined contribution plan similar to private sector 401(k) plans which provides Federal employees the opportunity to save for additional retirement security. (frtib.gov). The Federal Retirement Thrift Investment Board (FRTIB) manages over 4 ½ million asset accounts for members of the military, federal government employees, and their beneficiaries. The FRTIB’s mission is to administer the TSP solely in the interest of participants and beneficiaries. The FRTIB is managed by five board members who are appointed by the President and confirmed by the Senate. At the present time the board members are Michael Kennedy, Dana Bilyeu, Ron McCray, David Jones, and...
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...Foreign Subsidiary Investment Plan Case: Multinational Capital Budgeting China & Australia Hypothetical Incorporated MBA AF 626 Fall 2011 International Financial Management Professor XX XX XX XX XX Table of Contents PART I – Analysis: Australia vs. China A. Country Analysis 1. Economic Environment 3 2. Social Environment 10 3. Political Environment 12 B. Industry Analysis 1. Aluminum Industry in Australia 17 2. Airline Industry in China 18 PART II-Capital Budget Analysis 1. Weighted Average Cost of Capital 19 2. Net Present Value 20 3. Scenario Analysis 21 PART III – Conclusion: Investment Decision 23 References 24 Appendixes 26 PART I – Analysis: Australia vs. China A. Country Analysis I. Economic Environment Australia Australia is a market oriented financial system which includes the world’s 13th largest economy and the 9th highest per capita Gross Domestic Product (GDP), with almost two consecutive decades of growth and the unemployment rate falling to a generational low. As a result of nearly three decades of structural and policy reforms, Australian’s economy has proven to be a competitive player in the increasingly integrated global markets. In terms of country risk, Australia’s favorable attitude towards private enterprise and its well-protected property...
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...I. What is Foreign direct investment Foreign direct investment as known as FDI is an investment made by a corporation or individual from other country, the foreign investor will have ownership or controlling interest in the business. “Foreign direct investment” (FDI) takes place when a corporation in one country establishes a business operation in another country” (Moran, 2012) II. Why choose this study? Since 1978 Chinese government has announced new policy of reform and opening Chinese economic, Chinese government has offered lots of new policy to attract foreign investors, different provinces have different policy but attract more foreign direct investment is a basic state policy. The government has adopted a series of policy measures...
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...Investment Ideas: Expansion of some of the four star hotels in the USA: For this investment idea, an assessment of the four star hotels located in the USA will be carried out. The four star hotels that would have available real estate that can accommodate expansion of the buildings will be considered for this investment. This additional space will be used to build additional facilities such as casinos and hotel-clubs for night life entertainment. Customers will be given membership discount cards for regular use of the hotels. Complementary rooms will be made available to those customers that frequent the use of the casinos, Their casino usage will be monitored by an electronic card, which would be personalised to each customer. Permits, approvals and the necessary licenses for the necessary renovations and modifications to the hotels would have to be sought. The hiring of a reputable architect and contractor that can meet deadlines and work within a specified budget would also be required. To complete this part of the project, an estimated 50 weeks is required. Additionally, all the rooms in the four star hotels will be retrofitted with holographic technology, which will be controlled at a central location. The concept is to offer the customers a customised room that will meet all their desires or fantasises. Examples of this will include converting the room via appropriate software to conform to the environment of any country or to create a scenario that will safely fulfil...
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