Aims and objective
The purpose of this assignment is to apply key financial theories to different situations. The interpretation of the
results will demonstrate your competency in understanding market perception of key financial information relevant
to specific assets or institution. You will demonstrate a clear understanding of the main financial theories and their
application within a given numerical example
Tasks
You are asked to play the role of financial analyst to develop a simple investment action in 2
selected company stocks from two different sectors. Using financial data and investment
comprehensive analysis of the performance of the selected companies should be undertaken
using a different scenario that should be inspired from the current economic and financial
situation. Data on the selected shares may be obtained from verified sources such as Yahoo
Finance , Bloomberg L.P, Financial Times, Wall Street Journal. You can also use financial
website such as www.morningstar.com or www.trustnet.com. Determine by means of your
analysis the factors likely to have an impact on future stock marker movements. Please
examine what the market, i.e. the Wall Street Journal or the Financial Times, expresses and
juxtapose this against your own assessment of the factors that may influence stock market
prices.
The investment strategy must reflect a specific investment strategy feeding into clear investment
decision making process. As a future financial leader, you must reflect a clear vision, a
coherent decision-making process and ability to manage uncertainty and deal with various
financial risks.
Your concern is the future value of the future share prices of your securities. Remember as fund
manager you are selling future value to investors based on your current decisions and past
performance of those securities. You need to justify the choice of the right model in estimating
the forecast of the futures share prices, with estimate of earnings and how they will perform
together in a portfolio context. You must apply the CAPM model and justify how the selected
stocks are beating the market (benchmark). You need explain that value of selected stocks by
using the Financial Ratios such as PE Ratio and Dividend Models explain why the models
used do work or do not. Try to evaluate why the share price of that company or sector have
moved up/down and link it to some economic, technical or other factor-s. Please attempt to
forecast stock market levels as in say the Dow Jones or the FTSE 100 or the relevant market
index on the basis of these factors over the next 12 months.
