Investment Assignment (Solved)

FINANCE /
INVESTMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
QUESTION 1...................................................................................................................................3
(a) Significance of multistage model instead of constant growth in discounting model............3
(b) Calculate value of stock along with HPR..............................................................................4
QUESTION 2...................................................................................................................................4
(a) CAPM imply on its effect change on ANZ's investment......................................................4
(b) Agency problems and approaches to solve it........................................................................4
(c) Calculation of Arithmetic and geometric average rate of return...........................................5
QUESTION 3...................................................................................................................................5
(a) Difference of Jewellery store and grocery store in context of asset turnover and profit
margin.........................................................................................................................................5
(b) Calculation of net asset value or per share of each fund.......................................................5
QUESTION 4...................................................................................................................................6
(4.1 a) Calculation of information ratio of every manger...........................................................6
(4.1 b) Calculation of annualised information ratio with context of frequency..........................6
(4.1 c) Ranking managers as per information ratio.....................................................................6
(4.2) Characteristics of S&P /ASX 200 Index............................................................................7
QUESTION 5...................................................................................................................................7
(a) Difference between Fama French model and Capital asset pricing model...........................7
(b) Difference between Open ended fund and Close ended fund...............................................7
(c) Difference between Private equity fund and Hedge fund......................................................7
(d) Information ratio could be considered as benefit cost ratio..................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Investment has been done by various methods as they are very important for adopting for
process of decision making. The present study has been discussing about importance of
multistage model instead of constant growth model. It had shown various calculation for
calculating price or value of stock. Further it has articulated various statements for process of
decision making about investments.
QUESTION 1
(a) Significance of multistage model instead of constant growth in discounting model
Multistage model is given huge importance because of temporarily high rate of growth
during valuation of companies. All these specific organization tends for life cycles at early phase