Investment Psychology: Analysis, Questions, and Assignment

This article provides an analysis of investment psychology, answers to questions related to investment, and an assignment on investment. The article discusses the selection of investment, financial evaluation of companies, and comparison of selected companies to their competitors. The article is relevant for students studying finance, investment, and psychology.

Running head: INVESTMENT PSYCHOLOGY
Investment Psychology
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Pre-Assignment:.........................................................................................................................2
II. Investment Psychological Analysis:......................................................................................2
Answer 1:...................................................................................................................................2
Answer 2:...................................................................................................................................2
Answer 3:...................................................................................................................................2
Answer 4:...................................................................................................................................3
III. Questions:.............................................................................................................................3
Answer 1:...................................................................................................................................3
Answer 2:...................................................................................................................................3
Assignment:................................................................................................................................4
Introduction:...............................................................................................................................4
Answer 1:...................................................................................................................................4
Answer 2:...................................................................................................................................4
Answer 3:...................................................................................................................................6
Answer 4:...................................................................................................................................7
Answer 5:...................................................................................................................................8
Conclusion:................................................................................................................................9
Reference and Bibliography:....................................................................................................10

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Pre-Assignment:
II. Investment Psychological Analysis:
Answer 1:
From the two investment approaches the value approach to investing is considered the
most viable option, which could help in generating high rate of return from investment.
Answer 2:
The above investment scope needs to be chosen, as the growth prospect for the
investment is relatively high in comparison to the previous investment scope. The high level
of investments conducted in the above figure is relatively higher in comparison to pervious
investment scope.
Answer 3:
The selection of investment is mainly based on the risk capability and approach of the
investors. Moreover, from the options profit maximization is to be chosen, as it helps in
generating higher returns for the investment.

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Answer 4:
The use of online business is most viable approach for investment bankers, as they
can increase their reach in attracting more investors within their vicinity. The offline business
has its advantages and disadvantages, while the availability and scope of online business is
immense, which could increase the number of investors that could be attracted from online
business.
III. Questions:
Answer 1:
The key factors of becoming a successful investor is by having adequate knowledge
regarding the long-term planning with a keen interest on fundamentals of the business. This
would eventually allow the investors to generate higher rate of returns from investment, as
the adoption of long-term planning and fundamental evaluation would eventually help in
selecting adequate investment opportunities (Horvath and Rothlin 2017).
Answer 2:
Psychological approach towards selling the investment fund is by using adequate
selling techniques to generate higher rate of returns from investment. However, there is no
excuse for use of unethical measures in selling the investment, as this could hamper the
capital market. The unethical measure was relatively used by banks during the 2008 financial
Crisis to reduce the exposure in volatile property market. This led to the biggest financial
crisis in the current era, which was a relatively conducted due to the unethical measures used
by companies in selling bad investment funds (Bishop 2016).

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Assignment:
Introduction:
The assessment is mainly helpful in evaluating the overall investment scope, which
could eventually increase returns from investment. Moreover, the stocks such as Coca Cola
Bottling Co. Consolidation, Domino’s Pizza Inc., Google Inc, is used for detecting the
investment viability and further research.
Answer 1:
From the overall companies that are chosen from the list are Coca Cola Bottling Co.
Consolidation, Domino’s Pizza Inc., Google Inc, where adequate research on the selected
stocks are conducted to identify investment viability. The overall stocks are relatively Chosen
on the basis of diversity, which could increase higher returns from investment. In addition,
the selected stock could eventually increase the high returns from investment that is
anticipated by the investors due to the increasing growth obtained by the organizations.
Moreover, conducting further research on the selected companies would eventually help in
detecting the overall financial health and position of the organizations. Furthermore, it also
helps in understanding the future performance of the company by evaluating previous
historical achievements that is conducted by the organization.
Answer 2:
Adequate financial evaluation of the companies is conducted to detect its previous and
current financial condition, which could help in detecting the investment viability for the
investors. The financial history evaluation is conducted as follows.
Coca Cola Bottling Co. Consolidation:

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Coca Cola Bottling Co. Consolidation 2015 2016 2017
Quick Ratio 0.89 0.84 0.8
Debt/Equity 2.77 3.42 3.06
Gross Margin 39.07% 38.52% 35.64%
Operating Margin 4.26% 4.05% 2.22%
From the overall evaluation of the above table the financial history of Coca-Cola
bottling company can be identified. The overall liquidity position of the company has
declined where the cookery show has reduced from 0.89 to 0.8 in 2017. This was supported
by the increment in debt ratio from 2.77 to 3.06 in 2017. Furthermore, the gross margin and
operating margin of the company has declined adequately from 2015 to 2017. The historical
position of The Coca-Cola bottling company is relatively declining which indicates the lower
performance for the organization in future (Reuters.com 2018).
Domino’s Pizza Inc:
Domino’s Pizza Inc 2015 2016 2017
Quick Ratio 0.7 0.48 0.53
Interest coverage 4.08 4.13 4.27
Gross Margin 30.82% 31.05% 31.06%
Operating Margin 18.29% 18.36% 18.70%
The decline in quick ratio from 0.7 to 0.53 indicates the reduced capability of
Dominos to support at short term applications. However, the interest coverage ratio of the
organisation has increased, which is supported by increasing gross margin and operating
margin of the organisation. this indicates improvement financial position of Dominos over
the period and States the high profit that it could generate in future (Reuters.com 2018).

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Google Inc:
Google 2015 2016 2017
Quick Ratio 4.5 6 4.98
Debt/Equity 0.02 0.03 0.02
Gross Margin 62.44% 61.08% 58.88%
Operating Margin 25.82% 26.27% 23.59%
The financial position of Google Inc has a relatively declined over the period, as its
gross margin and operating margin has reduced from the heights, which was achieved in
2015. However, the debt ratio and quick ratio indicates stagnant improvement in its current
financial position, which could eventually help in generating higher returns from investment
(Reuters.com 2018).
Answer 3:
The decision regarding the selection of investment is mainly on logical basis, where
Google Inc, Domino's Pizza Inc, and Coca-Cola Bottling Co is a relatively considered the
market leaders in their industry. This could eventually help investors in generating higher
returns from investment as the scope of investing in these companies is immense, where the
returns are adequate while risk from investment is reduced substantially. Moreover, the
logical reason behind the selection of the stock is the high returns that is been provided by the
companies listed in the portfolio. this stock would eventually increase in value due to the
anticipated growth of the organizations. In this context, Duclos (2015) stated that use of value
stocks could allow investors to generate higher returns from investment, as compared to the
growth stocks, which portrays the highest risk to the investors.

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Answer 4:
The comparison of the selected companies to its competitors will eventually help in
detecting the growth conditions of organization. The following comparisons are conducted
for the selected companies with their competitors.
Coca Cola Bottling Co. Consolidation:
CompanyName Last Sale P / E
Ratio
Market Cap
Pepsico, Inc. $ 109.30 32.43 155,195,944
Coca-Cola Bottling Co. Consolidated $ 174.75 16.97 1,247,890
The above table a relatively indicate the competitor of Coca Cola bottling company,
which could help in identifying the competitiveness of the organisation. Pepsico Inc is
considered the competitor of Coca Cola bottling company where the market cap of Pepsico is
a relatively higher in comparison to its competitor. Furthermore, the P/E ratio of Coca Cola
bottling company is relatively lower than its competitor, which indicates declining financial
stability (Reuters.com 2018).
Domino’s Pizza Inc:
CompanyName Last Sale P / E Ratio Market Cap
Domino's Pizza Inc $ 231.46 39.57 9,968,982
Sysco Corporation $ 59.72 26.66 31,169,003
The competitor of Dominos can be identified from the above table, where market cap
of the company is relatively lower than its competition. However, the share price of Domino's

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is relatively higher with the overall PE/Ratio, which were relatively indicates its financial
stability over the competitors (Reuters.com 2018).
Google Inc:
CompanyName Last Sale P / E Ratio Market Cap
GOOGL Alphabet Inc. $ 1,009.95 56.23 301,463,005
Facebook, Inc. $ 157.20 29.17 376,638,938
From the valuation Facebook is considered to be the competitor of Google, where its
Market Cap is relatively higher. However, Google has highest share price and P/E ratio in
comparison to its competitive, which indicates its financial stability and progress that could
generate higher returns from investment (Reuters.com 2018).
Answer 5:
CompanyName Last Sale 52 Weeks High / Low
Coca-Cola Bottling Co. Consolidated $ 174.75 $ 249.54/$ 168.54
GOOGL Alphabet Inc. $ 1,009.95 $ 1,198/$ 834.60
Domino's Pizza Inc $ 231.46 $ 236.93/$ 166.74
The above table relatively indicates the overall peak and trough of companies based
on their share price. The current share price of Coca-Cola is relatively at the levels of trough,
which will indicate an adequate investment options for investors, as the prices rise to peak
again. Moreover, share price of the organization would eventually increase and reached the
peak that they have achieved previously. The share price of Google is relatively at the levels
of its peak, which indicates the financial strength of the organization. Moreover, this peak

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would be surpassed due to the continuous growth achieved by Google. The share price of
Domino's is also at the levels of its peak, which is due to the high revenue that is generated
by the organization over the period fiscal year. This continuous growth achieved by Dominos
is relatively portrayed in its share price. Therefore, the share price evaluation could
eventually help in detecting the investment scope, which could increase returns from
investment by reducing the risk (Jo and Kim 2014).
Conclusion:
From the evaluation of the assessment it could be identified that that is adequate
investment scope in Coca Cola Bottling Co. Consolidation, Domino’s Pizza Inc., Google Inc,
which could allow investor to generate high returns from investment. the financial
performance of the above company is also adequate, which could generate higher income in
future and raise the level of returns for the investor.

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Reference and Bibliography:
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