TOGETHER WITH THE ESSSAY CAN YOU SUBMIT THE REFERENCE LIST AS WEEL. THANK YOU
1.Critically discuss Portfolio Theory and the CAPM. The discussion should include assumptions and shortcomings of the model and possible alternatives.
- Select a company ensuring it issues Equity, Bonds and Options and that is listed on the FTSE100. Present a short summary of its business, with focus on its financial profitability ratios and strategy for future growth. You could for example show the company’s EPS growth over the last 5 years and compare their EPS and P/E with similar companies or the industry average. Is the company diversified? What are their risk levels as measured by their beta. To gain a good mark in this section you need to read as much as possible about the company, including their latest annual report and any news/reports from reliable sources. Your analysis needs to be from the perspective of an investor. Please include graphs/tables (clearly labelled with data source) as visual aids.
- Identify and show the securities issued by the company (equity, bonds, derivatives), show which securities have been more profitable in the last 6 months and make recommendations as to which securities you would invest in as a Fund Manager for a Mutual Fund based in UK. Clearly explain your choice.
- Critically discuss different equity valuation methods and identify the most appropriate method for your chosen company. By collecting relevant financial data from reliable sources (Bloomberg terminals, DataStream, annual reports, FT, etc.) estimate a price for the company’s shares and compare it to the actual market price. Clearly explain any assumptions made when applying your chosen valuation technique. Make sure to include all workings in an Appendix.