Investment Decision Assessment 2022
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ASSESSMENT
1
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Table of Contents
Part 1..........................................................................................................................................3
Part 2..........................................................................................................................................5
Part 3..........................................................................................................................................7
Part 4..........................................................................................................................................8
Reference Lists...........................................................................................................................9
Appendices...............................................................................................................................10
2
Part 1..........................................................................................................................................3
Part 2..........................................................................................................................................5
Part 3..........................................................................................................................................7
Part 4..........................................................................................................................................8
Reference Lists...........................................................................................................................9
Appendices...............................................................................................................................10
2
Executive Summary
This study is based on the investment decision of Mr. Cass who will retire in 25 years and
want a secure option for investment which can act as retirement plan in his future. The MVA
analysis is done with the data and his income is also calculated according to the increasing
inflation rate. The best recommendation has been provided out of the other investment
options.
3
This study is based on the investment decision of Mr. Cass who will retire in 25 years and
want a secure option for investment which can act as retirement plan in his future. The MVA
analysis is done with the data and his income is also calculated according to the increasing
inflation rate. The best recommendation has been provided out of the other investment
options.
3
Part 1
Introduction
In this assessment, the analysis have been made to evaluate the investment portfolio for MR.
Class for his return on investment. This report divulges that Mr. Cass is a worker and he
wants to invest funds for his retirement and on the basis of the MVA analysis. However, this
analysis has been used to identify the best investment options available for him
Finding analysis
After assessing the case, it has been found that Mr. Cass is a worker who earns $50000 per
annum and wants to invest in asset allocation. The place of investment is unknown so it
becomes difficult to analyze the return. However, expected return, Mr Cass expects 5-6%
return in his investment. If Mr. Cass is from a developed country then the monthly cash return
after investment will be higher than return available on the investment in developing
countries (Hoye et al. 2018). This has been found out that there are different kind of
portfolios based on which the overall market can operates. Mr. Cass therefore could invest in
this different kind of portfolio. However, if the investment could bring some profit to him
then the share price value will also be surged. According to researchers a MVA analysis, it
has been found that there will be surge in the invested share price. These different portfolios
are therefore Baa, Aaa, Us eq. as well as Em eq in this situation. The portfolio for commodity
is analyzed as 14% in 2017 which will be expected to change by 4.41%. MVA analysis faces
huge challenge with large number of data calculation. However the portfolio variance is
0.182205% which is computed by using the MVA analysis method.
Recommendation
The investment capital of the Mr. Cass would be restricted with the capital as he would be
able to invest less capital for his investment due to his limited income. However, the
suggested investment option for him would be the option giving higher return with the less
risk. Mr. Cass cannot invest in property as the requirement of funds will be higher so the
commodity market in developing countries would be the best option for investment for Mr.
Cass.
Conclusion
Mr. Cass as a middle class individual wants to invest for retirement but does not have proper
knowledge about the financial management. The recommendation has been provided to him
by analyzing various factors. In this, interpretation of data has been done and the average rate
4
Introduction
In this assessment, the analysis have been made to evaluate the investment portfolio for MR.
Class for his return on investment. This report divulges that Mr. Cass is a worker and he
wants to invest funds for his retirement and on the basis of the MVA analysis. However, this
analysis has been used to identify the best investment options available for him
Finding analysis
After assessing the case, it has been found that Mr. Cass is a worker who earns $50000 per
annum and wants to invest in asset allocation. The place of investment is unknown so it
becomes difficult to analyze the return. However, expected return, Mr Cass expects 5-6%
return in his investment. If Mr. Cass is from a developed country then the monthly cash return
after investment will be higher than return available on the investment in developing
countries (Hoye et al. 2018). This has been found out that there are different kind of
portfolios based on which the overall market can operates. Mr. Cass therefore could invest in
this different kind of portfolio. However, if the investment could bring some profit to him
then the share price value will also be surged. According to researchers a MVA analysis, it
has been found that there will be surge in the invested share price. These different portfolios
are therefore Baa, Aaa, Us eq. as well as Em eq in this situation. The portfolio for commodity
is analyzed as 14% in 2017 which will be expected to change by 4.41%. MVA analysis faces
huge challenge with large number of data calculation. However the portfolio variance is
0.182205% which is computed by using the MVA analysis method.
Recommendation
The investment capital of the Mr. Cass would be restricted with the capital as he would be
able to invest less capital for his investment due to his limited income. However, the
suggested investment option for him would be the option giving higher return with the less
risk. Mr. Cass cannot invest in property as the requirement of funds will be higher so the
commodity market in developing countries would be the best option for investment for Mr.
Cass.
Conclusion
Mr. Cass as a middle class individual wants to invest for retirement but does not have proper
knowledge about the financial management. The recommendation has been provided to him
by analyzing various factors. In this, interpretation of data has been done and the average rate
4
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of return is analysed with minimum risk as 4.01%, whether the upper return in this situation
can be 21.36% as well as the lowest return can be negative in this situation. According to this
case there is 2.5% chance for this negative return throughout the investment. However, the
best option that can be opted by Mr, Cass has been recommended.
5
can be 21.36% as well as the lowest return can be negative in this situation. According to this
case there is 2.5% chance for this negative return throughout the investment. However, the
best option that can be opted by Mr, Cass has been recommended.
5
Executive Summary
This study gives a brief explanation about the strategies used by the management for
investment purposes. The MVA analysis and EVA analysis have been discussed and best
strategy for MR. Cass is being recommended considering his investment choices, risk and
return factors. The option suggested meets the desired rate of return and is successful to meet
all the necessity of Mr. Cass.
6
This study gives a brief explanation about the strategies used by the management for
investment purposes. The MVA analysis and EVA analysis have been discussed and best
strategy for MR. Cass is being recommended considering his investment choices, risk and
return factors. The option suggested meets the desired rate of return and is successful to meet
all the necessity of Mr. Cass.
6
Part 2
Introduction
MVA analysis is done along with EVA for better understanding and analysis. For the analysis
purpose, there are three markets which have been taken into consideration. It helps in
choosing the best way of investment. Mr. Cass wants to invest funds and for those investment
strategies is to be followed.
Findings and analysis
The investing strategy would be based on the data analysis. The financial market analysis
methods and tools such as MVA analysis, share value analysis and price earning analysis will
be used to analyze the market considering the risk and return associated with the same
(Gallina et al. 2015). The fundamental analysis is primarily used strategy by the financiers.
Rule-based investment strategy is used to analyze and select the quality stocks in the market
in which the “rate of return” is expected to rise with the time and the risk rate is low.
As per the market factors, inflation rate, risk and return associated with the investment
option, Mr cass could use the Rule based investment strategy. This strategy focus on selecting
the highly return offering stocks in the market in which the “rate of return” is expected to rise
with the low risk level. This will help him to avoid the uncertain risk or loss and he could
easily increase his return on capital employed with low level of risk.
In Rule-based investment strategy the pattern of the stock is noticed and is calculated
according to rules. Some of the rules are “Spatiotemporal Climate Data, Visual Analytics
Techniques, Spatiotemporal Data Visualization, Spatial Filter and Multitier Data
Exploration.” The investment is done on the stocks which has emerging trend and that will
reveal the risk involved in Attribute analysis as well this helps to take better decisions
according to the need (Ioannou and Serafeim, 2015). The value investigation is based on ETF
investors and mutual funds. Value strategy is mainly focused on value rather than risk. In
Rule-based strategy the bargain value will be accepted (Investment price less than the fair
market value). It will be growth strategy that will help in increasing return% as 6% to 11.8%.
In growth strategy investors wants to experience the growth of their investment in a limited
period. The risk rate can be high but the growth rate must be higher. The capitalizing on
current price of stocks is based on their market performance. [Referred to appendix 1]
Recommendation
7
Introduction
MVA analysis is done along with EVA for better understanding and analysis. For the analysis
purpose, there are three markets which have been taken into consideration. It helps in
choosing the best way of investment. Mr. Cass wants to invest funds and for those investment
strategies is to be followed.
Findings and analysis
The investing strategy would be based on the data analysis. The financial market analysis
methods and tools such as MVA analysis, share value analysis and price earning analysis will
be used to analyze the market considering the risk and return associated with the same
(Gallina et al. 2015). The fundamental analysis is primarily used strategy by the financiers.
Rule-based investment strategy is used to analyze and select the quality stocks in the market
in which the “rate of return” is expected to rise with the time and the risk rate is low.
As per the market factors, inflation rate, risk and return associated with the investment
option, Mr cass could use the Rule based investment strategy. This strategy focus on selecting
the highly return offering stocks in the market in which the “rate of return” is expected to rise
with the low risk level. This will help him to avoid the uncertain risk or loss and he could
easily increase his return on capital employed with low level of risk.
In Rule-based investment strategy the pattern of the stock is noticed and is calculated
according to rules. Some of the rules are “Spatiotemporal Climate Data, Visual Analytics
Techniques, Spatiotemporal Data Visualization, Spatial Filter and Multitier Data
Exploration.” The investment is done on the stocks which has emerging trend and that will
reveal the risk involved in Attribute analysis as well this helps to take better decisions
according to the need (Ioannou and Serafeim, 2015). The value investigation is based on ETF
investors and mutual funds. Value strategy is mainly focused on value rather than risk. In
Rule-based strategy the bargain value will be accepted (Investment price less than the fair
market value). It will be growth strategy that will help in increasing return% as 6% to 11.8%.
In growth strategy investors wants to experience the growth of their investment in a limited
period. The risk rate can be high but the growth rate must be higher. The capitalizing on
current price of stocks is based on their market performance. [Referred to appendix 1]
Recommendation
7
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Mr. Cass can opt for any strategies that are explained above based on the rules however the
financiers would suggest not opting for growth strategies as it is concerned with only growth
and involves risk.
Mr. Cass should follow technical strategy and performing calculations according to
the rules then buy the stocks and then hold them for good return and can invest in UK
equities.
As Mr. Cass wants to invest for his retirement purpose he can opt to invest little in the
market and then hold for a long time that can generate good “return rate” in the future.
The inflation can help in raising the value of bonds according. The amount invested
will be 145000 and the return can be analyzed as 20105.47.
On the other side if Mr. Cass carefully invests within the market then he can get 5 to 6%
return against his investment in this situation. [Referred to appendix 2]
(Source: excel)
Conclusion
The MVA analysis is done to understand the “stock return” and the effects of the return in
financial market. The market in analyzed with various strategies and then out of various
analysis and results the best outcome is to be chosen for Mr. cass. The technical approach to
be taken into consideration for interpreting and according to the inflation and Mr.Cass salary
the investment type has been recommended.
8
financiers would suggest not opting for growth strategies as it is concerned with only growth
and involves risk.
Mr. Cass should follow technical strategy and performing calculations according to
the rules then buy the stocks and then hold them for good return and can invest in UK
equities.
As Mr. Cass wants to invest for his retirement purpose he can opt to invest little in the
market and then hold for a long time that can generate good “return rate” in the future.
The inflation can help in raising the value of bonds according. The amount invested
will be 145000 and the return can be analyzed as 20105.47.
On the other side if Mr. Cass carefully invests within the market then he can get 5 to 6%
return against his investment in this situation. [Referred to appendix 2]
(Source: excel)
Conclusion
The MVA analysis is done to understand the “stock return” and the effects of the return in
financial market. The market in analyzed with various strategies and then out of various
analysis and results the best outcome is to be chosen for Mr. cass. The technical approach to
be taken into consideration for interpreting and according to the inflation and Mr.Cass salary
the investment type has been recommended.
8
Part 3
Differences
In commodity market live stock can give $1921.30 as return and the value of these stocks are
not fluctuating much. So the risk factor is low and the investment according to the income of
$50000 with inflation rate 2% is good enough. In part 2 the the stock market with little risk of
$1573.5 has been notices and the risk is moderate and the benchmark set in one year 10.6% is
meeting
Strength and weaknesses
Strength: 2nd recommendation has “low cost” and 1st recommendation has “low risk”.
Weakness: 1st recommendation does not give “security on investment” and 2nd
recommendation does not give “high return”.
Pros and Cons
First Approach: MVA Analysis: The strength in 1st recommendation is low risk and
weakness is not meeting the desired return rate (Rong et al. 2015).
Second Approach: Rule-based strategy: The strength in 2nd recommendation is meeting the
desired return rate with risk factor involved in it.
9
Differences
In commodity market live stock can give $1921.30 as return and the value of these stocks are
not fluctuating much. So the risk factor is low and the investment according to the income of
$50000 with inflation rate 2% is good enough. In part 2 the the stock market with little risk of
$1573.5 has been notices and the risk is moderate and the benchmark set in one year 10.6% is
meeting
Strength and weaknesses
Strength: 2nd recommendation has “low cost” and 1st recommendation has “low risk”.
Weakness: 1st recommendation does not give “security on investment” and 2nd
recommendation does not give “high return”.
Pros and Cons
First Approach: MVA Analysis: The strength in 1st recommendation is low risk and
weakness is not meeting the desired return rate (Rong et al. 2015).
Second Approach: Rule-based strategy: The strength in 2nd recommendation is meeting the
desired return rate with risk factor involved in it.
9
Part 4
There are two types of investment management one is active and other one is passive. In
active management the managers interpret and analyze the past performance of the stocks in
the market and then by consulting with a group the decisions are taken for the investment.
This method is generally followed by the company in which one person cannot make any
decision for the investment. On the other hand there is passive management which does not
involve high interpretation and calculation of past performances of the stock market. In
passive management managers rely on the external index fund which diversifies the potential
turnover from the investment (patentimages.storage.googleapis.com 2019).
Mr. Cass as an individual can opt for both passive and active management for his investment.
He as per his budget and other external factors, could use active management in his
investment. The passive investment management could be used by him when he has high
budget or capital to invest in market. Nonetheless, it could be inferred that Mr. Cass could
either focus on investing capital through active management or if in case he has good amount
of capital then he could use mix investment management in his investment
(economicsdiscussion.net 2019).
Fig 1: Types of investment management
(Source Self Created)
10
Active
manage
ment
Passive
Manage
ment
There are two types of investment management one is active and other one is passive. In
active management the managers interpret and analyze the past performance of the stocks in
the market and then by consulting with a group the decisions are taken for the investment.
This method is generally followed by the company in which one person cannot make any
decision for the investment. On the other hand there is passive management which does not
involve high interpretation and calculation of past performances of the stock market. In
passive management managers rely on the external index fund which diversifies the potential
turnover from the investment (patentimages.storage.googleapis.com 2019).
Mr. Cass as an individual can opt for both passive and active management for his investment.
He as per his budget and other external factors, could use active management in his
investment. The passive investment management could be used by him when he has high
budget or capital to invest in market. Nonetheless, it could be inferred that Mr. Cass could
either focus on investing capital through active management or if in case he has good amount
of capital then he could use mix investment management in his investment
(economicsdiscussion.net 2019).
Fig 1: Types of investment management
(Source Self Created)
10
Active
manage
ment
Passive
Manage
ment
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Reference Lists
Book
Hoye, R., Smith, A.C., Nicholson, M. and Stewart, B., 2018. Sport management: principles
and applications. UK: Routledge.
Journals
Gallina, A., Bianchi, M., Gandaglia, G., Cucchiara, V., Suardi, N., Montorsi, F. and Briganti,
A., 2015. A detailed analysis of the association between postoperative phosphodiesterase type
5 inhibitor use and the risk of biochemical recurrence after radical prostatectomy. European
urology, 68(5), pp.750-753.
Ioannou, I. and Serafeim, G., 2015. The impact of corporate social responsibility on
investment recommendations: Analysts' perceptions and shifting institutional logics. Strategic
Management Journal, 36(7), pp.1053-1081.
Rong, Z.J., Barabash, S., Stenberg, G., Futaana, Y., Zhang, T.L., Wan, W.X., Wei, Y. and
Wang, X.D., 2015. Technique for diagnosing the flapping motion of magnetotail current
sheets based on single‐point magnetic field analysis. Journal of Geophysical Research: Space
Physics, 120(5), pp.3462-3474.
Online Article
patentimages.storage.googleapis.com (2019), Investment decision, Available at:
https://patentimages.storage.googleapis.com/9b/ba/2b/3642743c90c54e/US9064284.pdf
[Accessed on: 1.08.2019]
Website
economicsdiscussion.net (2019), Investment decision, Available at:
http://www.economicsdiscussion.net/investment-decisions/investment-decisions-meaning-
need-and-factors-affecting-it/21976 [Accessed on: 1.08.2019]
11
Book
Hoye, R., Smith, A.C., Nicholson, M. and Stewart, B., 2018. Sport management: principles
and applications. UK: Routledge.
Journals
Gallina, A., Bianchi, M., Gandaglia, G., Cucchiara, V., Suardi, N., Montorsi, F. and Briganti,
A., 2015. A detailed analysis of the association between postoperative phosphodiesterase type
5 inhibitor use and the risk of biochemical recurrence after radical prostatectomy. European
urology, 68(5), pp.750-753.
Ioannou, I. and Serafeim, G., 2015. The impact of corporate social responsibility on
investment recommendations: Analysts' perceptions and shifting institutional logics. Strategic
Management Journal, 36(7), pp.1053-1081.
Rong, Z.J., Barabash, S., Stenberg, G., Futaana, Y., Zhang, T.L., Wan, W.X., Wei, Y. and
Wang, X.D., 2015. Technique for diagnosing the flapping motion of magnetotail current
sheets based on single‐point magnetic field analysis. Journal of Geophysical Research: Space
Physics, 120(5), pp.3462-3474.
Online Article
patentimages.storage.googleapis.com (2019), Investment decision, Available at:
https://patentimages.storage.googleapis.com/9b/ba/2b/3642743c90c54e/US9064284.pdf
[Accessed on: 1.08.2019]
Website
economicsdiscussion.net (2019), Investment decision, Available at:
http://www.economicsdiscussion.net/investment-decisions/investment-decisions-meaning-
need-and-factors-affecting-it/21976 [Accessed on: 1.08.2019]
11
Appendices
Appendix 1: Investment strategies
(Source:
https://www.moneycrashers.com/wp-content/uploads/2012/04/investing-
strategies-styles-1068x713.jpg)
12
Appendix 1: Investment strategies
(Source:
https://www.moneycrashers.com/wp-content/uploads/2012/04/investing-
strategies-styles-1068x713.jpg)
12
Appendix 2: Probability Plot
0.11013215859030867.511013215859
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
Normal Probability Plot
Series1
Sample Percentile
Y
(Source: Excel)
13
0.11013215859030867.511013215859
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
Normal Probability Plot
Series1
Sample Percentile
Y
(Source: Excel)
13
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