Dissertation on Value Investing in Stock Markets and Risk

Added on - 06 Jun 2020

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Dissertation Title:Value Investingin stock markets andrelated risks.1
TABLE OF CONTENTSCHAPTER 1: INTRODUCTION....................................................................................................1Background of the study..............................................................................................................1Research aim and objectives........................................................................................................1Research Questions......................................................................................................................2Rationale of the study..................................................................................................................2Significance of the study.............................................................................................................2CHAPTER 2: LITRTATURE REVIEW.........................................................................................4Value investing and its approaches..............................................................................................4Indicators of value investing approaches.....................................................................................5CHAPTER 3: RESEARCH METHODOLOGY.............................................................................7Research type...............................................................................................................................7Research approach.......................................................................................................................7Research philosophy....................................................................................................................7Data collection.............................................................................................................................7Sampling......................................................................................................................................7Data analysis................................................................................................................................7Research limitations.....................................................................................................................8Reliability and validity................................................................................................................8Ethical considerations..................................................................................................................8CHAPTER 4: DATA ANALYSIS AND FINDINGS.....................................................................9CHAPTER 5: CONCLUSION AND RECOMMENDATIONS...................................................10REFERENCES..............................................................................................................................112
CHAPTER 1: INTRODUCTIONBackground of the studyIn the recent times, investors lay high level of emphasis on investing money in the sharesor stock of leading firms that offer high returns to them. Value investing may be served as aninvestment strategy where those stocks are selected which trade for less in comparison to theirintrinsic value (Kok, Ribando and Sloan, 2017). Now, this approach is widely used by bothindividual investors and portfolio managers. Moreover, value investors make focus on selectingor investing money in stocks with strong fundamentals such as earnings, dividends, book valueand cash flows. All such indicators are highly significant which in turn provides deeper insightabout the extent to which concerned stocks come under value investing aspects. Hence, thisdissertation will shed light on the methods that can be employed for meeting the purpose of valueinvesting aspects in the context of London stock market. Along with this, it also entails themanner through which risk associated with the stock market investments can be mitigated moreeffectually. Hence, for achieving research objectives 12 companies have been selected fromdifferent sectors include oil & gas, pharmaceuticals, banking, retail and travel & leisure. Hence,comparison of the stock prices with the various indicators such EPS, dividend yield and cover, P/E, price to book value and debt-equity measure will be done.Research aim and objectivesResearch Statement:The aim of research is to outline methods of successful valueinvesting in stock markets and how to avoid risks.Research objectives: Considering the above aim following objectives have been drafted such as:To investigate value investing approaches thatTo analyze the ways that assists in identifying undervalued stocks.To assess the significance of market analysis and screening process in the selection ofvalue investing opportunity.To identify the indicators available beyond financial reports.1
To develop understanding about the risks associated with stock market and ways tomanage them.Research QuestionsOn the basis of above mentioned objectives, specific research questions have beenframed such as:Q.1 What is Value investing and its approaches?Q.2 What are the signs of a potential value investing opportunity?Q.3 How to find undervalued stocks?Q.4 What are the indicators beyond financial reports?Q.5 What are the risks involved and how to manage them?Rationale of the studyThe rationale behind carry out present investigation is to assess the value investigatingapproaches that are associated with the stock market. This is recognized as an issue becauseaspects of value investing are tricky or complex because the value placed on business usuallysubjective in nature. Now, this is considered as an issue because investors face difficulty infinding stocks that performs much better in comparison to the overall long-term market average.Usually, it is highly difficult for the investors to beat the market and assessing suitable stocks forthe investment purpose. Moreover, stocks with high growth do not give assurance regardingextra profit margin. The reason behind the same is the incorporation of prospects into the price ofstocks. In addition to this, large number of investors only expects average return but there is asignificant risk of underperformance due to the aspects of misjudgement. Hence, such study willhighlight the indicators that help in deciding potential investment opportunities. For this purpose,assessment of 12 companies operating in different sectors, listed on London stock exchange, forthe period of 5 years have been made.Significance of the studyThe present study and its outcomes are highly significant from several perspectives.Results of such investigation will provide investors with the valuable information regarding the2
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