(solved) investment analysis and portfolio management pdf
Added on 2020-06-06
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Capital Market
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3Rationale behind the choice of portfolio.....................................................................................3Evaluation and application of investment theory........................................................................7EVALUATION.............................................................................................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................14
INTRODUCTION Capital market implies for the financial area where equities and debts are bought andsold. In the recent times, investors lay high level of emphasis on investing money in thesecurities for generating high returns. Further, now investors also make focus on investingmoney in the wide range of securities rather than in only one. In other words, investors manageportfolio for reducing the risk level and making value addition in money. On the basis of citedcase situation, investor has £150000 for investing money in the securities, bonds, derivatives andcombination of the same. Hence, with the motive to earn return from portfolio combination ofsecurities and bonds have been selected. In this, 3 securities and 2 bonds are selected formanaging the risk level. In this, portfolio period will be from 27th February to 3rd April 2018.Along with this, for spreading risk level investment is allocated to the securities of differentsector. Here, the main motive of investor is to minimize the risk level and earning suitablereturns from the investment made. In this, report will provide deeper insight about the aspectsconsidered while making selection of assets and overall portfolio. Further, report will alsodevelop understanding about the theoretical aspects associated with the investment aspects. Rationale behind the choice of portfolio In relation with selecting these industries and analysis their financial strengthen is toacknowledge the market value of them. Therefore, it will be beneficial to have appropriateinformation and knowledge regarding the business strength as investor's point of view. The P/Eratio of Diageo, Astra Zeneca and Smith & Nephew is on favourable state such as these are morethan 10%. Therefore, it will be beneficial for firm in terms of retaining the that much or returnover their sold securities. In the upcoming time it will benefit the investors to have appropriatereturns on their investments. The PE ration of Diageo is 19.30%, Astra Zeneca as 30.25% andSmiths and Nephew as 15.30%. On the other side, the beta rate and EPS of these industries areup to the mark and which will be beneficial to it equity holders to have long-term advantagesfrom business. In accordance with bonds such as TR28 and V025 which has been selected is onthe basis of their maturity period and weights of these securities in the market. Therefore, V025
has weight of 2% and TR28 as 1%. Thus, to make the investments in these organisations whichwill be helpful and beneficial to investors in terms of taking the long terms advantages.Assets For avoiding high risk level investment fund has allocated by the investor in 5 assetsinclude both securities and bonds. Out of 3 securities, 2 has high beta approximately near to 1which shows high level of volatility. On the other side, one security with low beta has consideredfor balancing the risk level. In addition to this, bonds provide investors with fixed returns and arenot subject of high fluctuations. Hence, for avoiding loss at all cost combination of debt andsecurity has undertaken by the investors. DGE.L- Diageo Plc:This is a beverage group which usually serves alcoholic products such as wines, liquorsand beers. There are various brands of this firm such as Guinness, Johnnie Walker, Baileys andSmirnoff. The performance of organisation is at favourable constant as it has made net sales of14.5% more than previous year. Moreover, to demonstrate the profitability of the organisation incontext with meeting the requirements such as the beta value of firm is 0.61 which is near to 1.Thus, it can be said that the changes in share prices of Diageo is not that much fluctuating. Onthe other side the EPS is 93.3, it determines that business will have appropriate earning over eachsale of security.Astra Zeneca:This is an Anglo-Swedish MNC which deals in pharmaceutical and biopharmaceuticalbusiness. In the year 2013 it moved to Cambridge and has operated research and development insuch pharmaceutical industries. The main aim of this organisation is to develop and manufacturemedicines which will be helpful to the citizens and members which will be helpful in treating thedisorders in gastrointestinal, vascular, psychiatric, respiratory, cardiac, infection, pathology,oncology and inflammation. The growth of organisation is not that satisfactory as it determinedby the professionals and the external parties. However, it has been argued here that investorsmake investments in many shares instead of one which reduces funds for the particular
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