Reference no: EM132339871 , Length: word count : 1500

Assignment

Q1. You are an investment adviser to a finance company in Sydney Australia. Ms Rebecca Jones recently inherited $10 million dollars from her late grand father's estate. Ms Jones is considering putting all her money in stocks. She is not comfortable of making the decision as this being her first time as a player in the market.

She does not want to invest in more than one company. She is seeking your advice on how to select a company. The three companies you arc dealing with in this assignment are her best and only choices. You are required to analyse the performances of the three companies to provide expert advice for Ms Jones ai that she can make her decision.

Q1.1 Complete the data at the end of Dec 2018 for three companies.

Description

Total assests(book value)($m)

Total liabilities (book value) ($m)

Number of shares (millions)

Market ca italisation ($m)

Your designated Compnay

Another company in the same industry as your designated one

Another company not in the same industry as your designated one
 
Useful hints: Yahoo finance and annual reports of the companies would be helpful sources.

Q1.2. Calculate the following for all three companies:

a) market value of equity to book value of equityzatio (i.e., market-to-hook ratio)

b) return on equity (ROE)

c) dividend per share (DPS)

c) intrinsic value per share assuming a required rate of return of 10%

Q2. Which stock will you recommend for Ms Jones to invest in? Justify your decision, (use at least the information in the ALL four aspects covered in (Q1 above, attach your data in an Appendix -- use Exel).

Q3. Use the monthly prices of stocks of your designated company and monthly prices of S&P/ASX (^AXJO)200 over the period 1 April 2013 t0 31 March 2018. Perform the following calculations.

3.a Monthly returns from stocks of your designated company

3.b Yearly returns from stocks of your designated company

3.c Average yearly returns over the five years from stocks of your designated company

3.d Monthly returns from ^AXJO

3.e Yearly returns from ^AXJO

3.f Average yearly returns over the five years from ^AXJO

3.g Total risk associated to investment in your designated company.

3.h Explain with examples the concepts; systematic risk and unsystematic risk (max 500 words).

Your analysis on investing in your designated company.