...Investment Report Jane & Douglas Breighton Investment Report Jane & Douglas Breighton Best Choice Investment Solutions | FINM3008 Best Choice Investment Solutions | FINM3008 Minggang Gu|u5108473 Kejie Wang|u5133766 Tutorial Thursday 4pm Suggested Asset Allocation Breighton Holdings 14% Australian Equities 0% World Equities, Unhedged 0% World Equities, Hedged 11% Emerging Markets 13% EQUITIES 38% Australian Fixed Income 13% World Fixed Income, Hedged 19% Australian Index-Linked Bonds 0% Australian Cash 1% FIXED INCOME 33% Australian Listed Property 8% Australian Direct Property 9% PROPERTY 17% Hedge Funds 9% Commodities 1% US Private Equity 2% ALTERNATIVES 12% TOTAL 100% Contents Some critical assumption……………………………2 Asset Class Considerations………………………….2 Equities…………………………………………………..2 Fixed Income………………………………………….3 Alternatives and Property………………………4 Analysis Mothod………………………………………….5 Historical 3 Year Rolling Returns…………….5 Bootstrap Analysis………………………………….5 Mean-Variance Optimizer……………………..6 Results…………………………………………………………7 Final Recommendation……………………………….8 Building a Concrete Portfolio for Jane and Douglas Breighton………………………………….8 Appendices………………………………………………….9 References………………………………………………..13 Minggang Gu|u5108473 Kejie Wang|u5133766 Tutorial...
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...Chapter 01 The Investment Environment Multiple Choice Questions 11. The material wealth of a society is equal to the sum of _________. A. all financial assets B. all real assets C. all financial and real assets D. all physical assets E. none of the above Financial assets do not directly contribute the productive capacity of the economy. 13. _______ are financial assets. A. Bonds B. Machines C. Stocks D. A and C E. A, B and C Machines are real assets; stocks and bonds are financial assets. Difficulty: Easy 14. An example of a derivative security is ______. A. a common share of General Motors B. a call option on Mobil stock C. a commodity futures contract D. B and C E. A and B The values of B and C are derived from that of an underlying financial asset; the value of A is based on the value of the firm only. 17. An example of a primitive security is __________. A. a common share of General Motors B. a call option on Mobil stock C. a call option on a stock of a firm based in a Third World country D. a U.S. government bond E. A and D A primitive security's return is based only upon the earning power of the issuing agency, such as stock in General Motors and the U.S. government. Difficulty: Easy 19. _________ financial asset(s). A. Buildings are B. Land is a C. Derivatives are D. U.S. Agency bonds are E. C and D A and B are real assets. Difficulty: Easy 20. The value of a derivative security _______. A. depends on the value of the related primitive...
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...Chapter 1 UNDERSTANDING INVESTMENTS Multiple Choice Questions Establishing a Framework for Investors 1. Which of the following is the best definition of wealth? a. the sum of all current and future income b. the total of all assets and all income c. the total of assets and income less any liabilities. d. the sum of current income and the present value of future income. (d, moderate) 2. Stocks and bonds would be classified as: a. real assets b. indirect assets c. personal assets d. financial assets (d, easy) 3. Technically, investments include: a. only financial assets. b. only marketable assets. c. financial and real assets that are marketable or non-marketable. d. only financial and real assets that are marketable. (c, easy) 4. The retirement plans that guarantee retirees a set amount of money each month are known as: a. 401(k) plans b. self-directed plans c. defined-benefit plans d. defined-contribution plans (c, moderate) The Importance of Studying Investments 5. The investment professionals that arrange the sale of new securities are called: a. arbitragers b. traders c. investment bankers d. specialists (c, moderate) 6. Another name for stockbrokers is: a. specialists ...
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...CHAPTER 1 THE INVESTMENT SETTING Answers to Questions 1. When an individual’s current money income exceeds his current consumption desires, he saves the excess. Rather than keep these savings in his possession, the individual may consider it worthwhile to forego immediate possession of the money for a larger future amount of consumption. This trade-off of present consumption for a higher level of future consumption is the essence of investment. An investment is the current commitment of funds for a period of time in order to derive a future flow of funds that will compensate the investor for the time value of money, the expected rate of inflation over the life of the investment, and provide a premium for the uncertainty associated with this future flow of funds. 2. Students in general tend to be borrowers because they are typically not employed so have no income, but obviously consume and have expenses. The usual intent is to invest the money borrowed in order to increase their future income stream from employment - i.e., students expect to receive a better job and higher income due to their investment in education. 3. In the 20-30 year segment an individual would tend to be a net borrower since he is in a relatively low-income bracket and has several expenditures - automobile, durable goods, etc. In the 30-40 segment again the individual would likely dissave, or borrow, since his expenditures would increase with the advent of family life, and conceivably...
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...Investment Memorandum FIN 3300 Step 1: Asset Allocation From the forecast provided by the Congressional Budget Office (CBO) and the Federal Reserve the economy is growing. According to the Federal Reserve, policy makers have raised the new forecast to 3.4 up to 3.9 percent growth in output and services. Real GDP is projected to increase by 3.1% this year and by 2.8% next year due to the continued strong growth in business, investment, and a modest increase in consumer spending. This also will reflect the impact of the Tax Relief, Unemployment Insurance, Reauthorization, and Job Creation Act of 2010. These four components not only will provide a short-term boost to the economy by reducing some taxes but also extend unemployment benefits. Inflation will remain very low in 2011 and 2012 and will average no more than 2.0% a year between 2013 and 2016. With job creation, the unemployment rate will gradually fall to 9.2% in the fourth quarter of 2011. Due to the current growth of the economy, low inflation rates, and a growing GDP, the majority of our investments will be allocated in stocks or higher risk securities that could potentially provide a higher yield. Therefore we are taking a Bullish strategy because we expect the underlying stock price to move upwards. We want higher expected returns, so we are willing to pay the price in terms of accepting higher investment risk. With the economic forecast reflecting a brighter growth prospectus this year, our investment...
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...INVESTMENT APPRAISAL HANDOUT Example The capital investment committee of a state owned corporation is currently considering two projects. The estimated income from operations and net cash flows expected from each operation are as follows: | PROJECT A | PROJECT B | Year | Income from operations$ | Net Cash Flow$ | Income fromOperations$ | Net Cash Flow$ | 1 | 12,000 | 44,000 | 26,000 | 58,000 | 2 | 18,000 | 50,000 | 20,000 | 52,000 | 3 | 20,000 | 52,000 | 16,000 | 48,000 | 4 | 16,000 | 48,000 | 16,000 | 48,000 | 5 | 22,000 | 54,000 | 6,000 | 38,000 | | 88,000 | 248,000 | 84,000 | 244,000 | Each project requires an investment of $160,000. Straight line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis Required 1. Calculate the following: a) The average rate of return for each project b) The net present value for each project. Use the present value of $1 table available on the internet http://highered.mcgraw-hill.com/sites/0072994029/student_view0/present_and_future_value_tables.html 2. Why is the present value of Project B greater than Project A even though its average rate of return is less? 3. Prepare a summary for the capita; investment committee, advising it on the relative merits of the two projects SOLUTION 1. a ) Average rate of return for Project A $88,000 /5 = 22% ($160,000 +$0) /2 b) ) Average...
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...5. (20 Marks) a. If you earn no interest on the funds in your margin account, what will be your rate of return after one year if WN stock is selling at (i) $88; (ii) $80; (iii)$72? Assume that WN pays no dividends. If WN’s stock sells at price p at the end of the year, you end up with $250(80 − p) + $15, 000. Hence the return on this investment, rp, is given by 250 X 80-p+ 15,000-15,00015,000 = 80-p60 Thus r88 = −13.33%, r80 = 0% and r72 = 13.33% b) If the minimum margin is 30 percent, how high can WN’s price rise before you get a margin call? There a total of $35,000 in the margin account (sale of 250 shares at $80 each plus the $15,000 deposit). Total liabilities are 250p. There’s a margin call when 35,000-250p250p = .3 Which implies that p=107.69 c) Redo parts (a) and (b), now assuming that WN’s dividend (paid at year-end) is $2 per share. The return on the investment is then, for a price p at the end of the year, 250 X 80-p+ 15,000-15,000-50015,000 = 78-p60 Thus r88= -16.67%. r80= -3.33%, and r72= 10% Total assets in the margin account at the end of the year are now $35, 000−$500 = $34, 500, thus a margin call occurs if 34,500-250p250p = 0.3 Which implies that p=...
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...Advisors is a boutique investment banking firm that provides start-ups and small and medium enterprises with financial advisory services such as capital syndication. My internship experience with CreedCap Asia Advisors gave me firsthand experience on deal transactions. I worked on live equity and debt deal transactions. I learnt how to create financial models, analyze it and pitching for debt deals. My responsibilities during the period were as follows: I built and assisted in making financial models for equity and debt financing deals. As part of the financial modeling, I developed, analyzed and benchmarked the assumptions, and tested the feasibility of the model. Questioning each plugged in variable that will drive model and getting all the details right from the client was the process adopted to create a solid model. Followed by, projection of free cash flow of a company and using financial metrics like turnover, EBITDA, PAT, gross profit margin, ROCE, etc. to analyze the financial strength and operational efficiency of the firm over the projected period. I assisted in investor meets for debt deal. I assisted in financial ratio analysis for debt deal and routine task that helped them save time. I helped the firm in business development. I gathered information and assisted them in screening and evaluating companies that can be potential clients. I did research on health care industry, profiling the industry, the trends in private equity investment, assessing and identifying...
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...Different Types Of InvestmentsIt is very necessary to know different types of investment before you actually start investing. There are hundreds of different investments types available. An understanding of the core concepts and a thorough analysis of the various types of investment can help you to make the right choice. Take a look at different investments types given below.Bonds investmentsOne of the different kinds of investments is bond investments. Bond is commonly used to refer to any securities that are founded on debt. These are fixed income instrument which are issued for the purpose of raising capital. When you purchase a bond, you are lending out your money to a company or a government. In return, they will give you interest on your money and eventually pay you back the amount you lent out. Bonds issued by the Government carry the lowest level of risk but could deliver fair returns.Stocks investmentsBuying stocks is also one of the investments types. To purchase a stock makes you to become a part-owner of the business. This entitles makes you to receive the profits generated by the company. These profits are called as dividends. Stocks are more volatile and riskier than bonds. However, stocks provide relatively high potential returns as compared to bonds.Mutual Funds investmentsAnother different investments types that you can invest is mutual funds. Mutual fund is the collection of stocks and bonds. This also involves paying a professional manager to select specific...
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...ScenarioThe bank of TSB (Lloyds bank) is an investment bank involved in selling securities such as stocks and bonds to the public, as well as traditional scope of business such as deposit and loan. After graduation, you decided to join the bank as a financial advisor, to advice about market trends in specific securities, such as stocks, bonds, mutual funds, limited partnerships, and commodity pools, and the real estate such as coins, precious metals, then providing a selective list of products, finally try to offer the asset allocation advices. The bank has a large collection of guides, which cover everything from the basics of investing to information on investment risk and financial planning. Tom and Jerry are customers of your bank, they attempting to create an “optimal” opportunities for themselves and get benefit from financial advice. New to investing, they have 3 steps to follow1 the Background of Tom and Jerry | Tom (¥) | Jerry (¥) | Investment Capital | 80,000 | 750,000 | Income (per month) | 2,900 (16,00 from salary and 13,00 from online retailing) | 9,500 (salary) | Eating | 750 | 1,000 | Mortgage (liability) | 0 | 2,300 | Transports | 500 | 2,000 | Recreation | 1000 | 3,200 | Others | 400 | 600 | Figure 1 Personal capital and expenditure | * Tom is a salesman of Dell Company, still not married. Aims to buy a new car after 3years (valued150, 000), he wants to get a better financial plan from advisor. * Jerry an engineer with high level of...
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...Chapter 2 Homework: 4. a. Someone in the 36 percent tax bracket can earn 9 percent annually on her investments in a tax-exempt IRA account. What will be the value of a one-time $10,000 investment in 5 years? 10 years? 20 years? b. Suppose the preceding 9 percent return is taxable rather than tax-deferred and the taxes are paid annually. What will be the after-tax value of her $10,000 investment after 5, 10, and 20 years? 5. a. Someone in the 15 percent tax bracket can earn 10 percent on his investments in a tax exempt IRA account. What will be the value of a $10,000 investment in 5 years? 10 years? 20 years? b. Suppose the preceding 10 percent return is taxable rather than tax-deferred. What will be the after-tax value of his $10,000 investment after 5, 10, and 20 years? 6. Assume that the rate of inflation during all these periods was 3 percent a year. Compute the real value of the two tax-deferred portfolios in problems 4a and 5a. Solution: a. $10,000 invested in 9 percent tax-exempt IRA (assuming annual compounding) In 5 years: $10,000(FVIF @ 9%) = $10,000(1.5386) = $15,386 In 10 years: $10,000(FVIF @ 9%) = $10,000(2.3674) = $23,674in 20 years In 20 years: $10,000(FVIF @ 9%) = $10,000(5.6044) = $56,044 (b). After-tax yield = Before-tax yield (1 - Tax rate) = 9% (1 - .36) = 5.76% $10,000 invested at 5.76 percent (assuming annual compounding) in 5 years: $10,000(FVIF @ 5.76%) =...
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...2012 Level II Mock Exam: Afternoon Session The afternoon session of the 2012 Level II Chartered Financial Analyst (CFA®) Mock Examination has 60 questions. To best simulate the exam day experience, candidates are advised to allocate an average of 18 minutes per item set (vignette and 6 multiple choice questions) for a total of 180 minutes (3 hours) for this session of the exam. By accessing this mock exam, you agree to the following terms of use: This mock exam is provided to currently registered CFA candidates. Candidates may view and print the exam for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing or permitting access by anyone other than currently registered CFA candidates and copying, posting to any website, e-mailing, distributing, and/or reprinting the mock exam for any purpose. Marcus Pinto Case Scenario A struggling asset management company recently hired Marcus Pinto, CFA, as chief operating officer (COO). Pinto’s first responsibility is to recommend to the Board of Directors how they can lower costs while still retaining the firm’s client base and how to increase assets under management. Pinto analyzes the firm, its clients’ needs, and general market conditions before presenting his findings to the Board of Directors. At the presentation, he makes the following statements: Statement 1: “If the company adopts the CFA Institute Standards of Professional Conduct, the...
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...INVESTMENT ANALYSIS AF335: Investments Table of Contents 1. Introduction…………………………………………………………………………....3 2. Equity Analysis………………………………………………………………………..3 3. Recommendation……………………………………………………………………....6 4. JLG Equity Analysis Template………………………………………………………7 5. Value Line Report……………………………………………………………………12 INTRODUCTION PepsiCo is a world leader in convenient snacks, foods, and beverages, with revenues of more than $39 billion and over 185,000 employees. PepsiCo owns some of the world's most popular brands, including Pepsi-Cola, Mountain Dew, Diet Pepsi, Lay's, Doritos, Tropicana, Gatorade, and Quaker(http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-homeProfile&t=&id=&). Their brands are available worldwide through a variety of go-to-market systems, including direct store delivery (DSD), broker-warehouse, and food service and vending. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001(http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-homeProfile&t=&id=&). I’ve selected PepsiCo as my investment and Value Line report was the key factor in my decision. EQUITY ANALYSIS Equity analysis includes analysis of traditional and value-based metrics. Traditional metrics include expected growth rates, price multiples, projected ROE, fundamental stock return and residual income. Expected growth rates and price multiples...
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...复旦大学管理学院院 投资学期末考试试卷 样品 课程名称：__投资学 _________ 课程代码： MANA130029.01____________ 开课院系：__管理学院财务金融系____ 考试形式：闭卷 姓 名： 学 号： 专 业： |题 号 |1 |2 |3 |4 |5 |总 分 | |得 分 | | | | | | | (以下为试卷正文) 一、选择题 （60分）Multiple choices （60 point, one point each） 1. 资本配置线可以描述为 A) 投资机会集由一个无风险资产和一个风险资产构成 B) 投资机会集由两个风险资产构成 C) 上面每个点对某个投资者来说效用都一样 D) 每个点期望收益一样但风险不一样 E) 上面一个都不对 1. The Capital Allocation Line can be described as the A) investment opportunity set formed with a risky asset and a risk-free asset. B) investment opportunity set formed with two risky assets. C) line on which lie all portfolios that offer the same utility to a particular investor. D) line on which lie all portfolios with the same expected rate of return and different standard deviations. E) none of the above. 3．无风险利率为5%，风险资产如下 Security A: E(r) = 0.15; Variance = 0.04 Security B: E(r) = 0.10; Variance = 0.0225 Security C: E(r) = 0.12; Variance = 0.01 Security D: E(r) = 0.13; Variance = 0.0625 投资者将选择哪一个资产来组成风险资产和无风险资产的组合 A) A. B) B. C) C. D) D. E) 不能决定. 3. Consider a T-bill with a rate of return of 5 percent and the following risky securities: Security A: E(r) = 0.15; Variance = 0.04 Security B: E(r) = 0.10; Variance = 0.0225 Security C: E(r) = 0.12; Variance = 0.01 Security D: E(r) = 0.13; Variance...
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...Also, it is important to note that various stocks have different correlations with the market. That is to say, some stocks have a positive beta coefficient, which means that the stock value increases and decreases as the market goes up and down respectively. Other stocks have a negative beta coefficient, which means that when the market is up, the stock value goes down and vice versa. Also, many of the stocks that offer a high return are sure to have more risk than those that offer a low return. Usually, investors try to minimize their risks and maximize their returns and this is done by diversifying their investments in a portfolio. This basically means that an investor invests in a variety of stocks with varying beta coefficients so as the whole portfolio earns a certain return and has a certain amount of risk. The risk of the investor is thus diversified through investments in portfolios. Recent trends of the stock markets have shown a relatively good success of technological companies such as IBM, Apple, and Microsoft. Keeping this in view, I would like to purchase $2,000 worth of stocks for each of these three companies. Also, I would like to invest $1,000 in stocks of Motorola. I would also like to invest $1,000 in stocks of Schlumberger and $1,000 in General Electric. The last $1,000, I would like to invest in stocks of Citigroup Inc. The reason that I decided to invest in the electronic companies is because technology and electronic companies have seen a tremendous...
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