Investment Rationale for Desklib

PART I – INVESTMENT RATIONALE
Answer 1

Answer 2
Answer 3
According to the Debt to Equity ratio and the Gearing ratio in my portfolio it shows
that the safest bond is Insurance Australia Group Ltdwith 0.294 debt/equity which
means it is more financially stable business, and the gearing ratio is 0.23. The
riskers bond in the portfolio with highest Debt to Equity ratio is the NATIONAL
AUSTRALIA BANK LTD with 4.33 and gearing ratio of 0.81.
Credit analysis is important for investors to measure the company’s ability to pay
back its debt obligation. Moreover, it is the way to determine the level of risk for the
entity.
Answer 4
In the stable and strong economies Government bonds considered to be risk free
bonds. since its baked by government by raising taxes or print money to repay their
domestic currency debt. However, in reality we can’t say its risk free since
government bond may default if the value currency reduced or the economy is not.
Examples of the government default are Portugal, Italy, Ireland, Greece and Spain

Answer 5
Issue explain what each
of the issuer’s does
Strength Weaknesses
Telstra telecommunications
company which
builds and operates
telecommunications
networks and
markets voice,
mobile, internet
access, pay
television and other
products and
services.
1. Telstra is
Australian leading
telecommunications
and information
services
company and
Expanding
Operating Margin
2. Wide Range of
Service Portfolio
3. Strong Customer
Service Base
4. Active
sponsorship in
major sporting
events
5. Over 35,000
employees serving
customers from
230 countries and
territories indirectly
1. Limited
Liquidity
Position
2. Extremely
tough market
segment means
limited market
share
Beta is
0.69
Less
sensitive
8%
Emirates NBD
BANK PJSC
One of the largest
banking groups in
the Middle East in
terms of assets
which provides
corporate,
consumer, treasury,
and Islamic banking
services.
1. Dominant market
position
2. Strategic
differentiation by
being the leaders in
network
3. Investments in
latest technology
4. Expansion in key
markets
5. Cordial relations
with regulatory
bodies
1. Operational
inefficiencies
and
unsatisfactory
customer
service.
2. Suffers from
latency issues
when
compared to
competitors
Vodafone and
Optus.
3.Price higher
than
competitors
Beta:
0.58
Less
sensitive
8%
COMMONWEALTH
BANK OF
AUSTRALIA
Australian
multinational bank
with businesses
across New
Zealand, Asia, the
. The bank owns
various brands.
2. The bank has
operations in
The bank was
involved in
controversies
which was
started by a
Beta:
1.10
More
sensitive
10%

United States and
the United Kingdom various countries.
3. The bank
provides services
such as Insurance,
Consumer banking,
Corporate banking,
Investment banking,
Global wealth
management,
Private equity,
Mortgages, Credit
cards.
4. The bank has a
strong revenue and
increasing profit
action group
and website
called
“Unhappy
Banking”
2. The financial
strength rating
by Moody’s
provided for
the
Commonwealth
bank is B-
3. The bank
sees a loan
impairment
expense which
a is concern.
NATIONAL
AUSTRALIA BANK
LTD
.Strong brand name
and good financial
position
2.Good revenue and
interest income
3.Leading financial
player with diverse
products and
services
4.Personal and
business financial
services
5. Australia's largest
business bank by
assets
.Decline in
revenue
affecting
growth and
development
2. No global
acclaim
10%
QANTAS AIRWAYS
LTD
largest airline by
fleet size,
international flights
and international
destinations. It is
the third oldest
airline in the world
1. Strong
international and
domestic presence
2. Backing by the
government of
Australia.
3. Has been one of
the oldest airline
operators in the
world
4. Qantas
1. Issues like
price fixing,
incidents etc
have hurt the
image in the
past
2. Limited
international
presence
of Qantas
Airways
compared to
Beta:0.12
Less
sensitive
5%