Finance Report: Suncor Growth, ETFs, Bond Analysis, and Ratings

This finance report provides a detailed analysis of Suncor's implied growth rate, calculated at 12.3%, considering its P/E ratio and market returns. It also highlights the advantages of investing in exchange-traded funds (ETFs), emphasizing diversification and lower fees compared to managed funds. The report compares short-term and real return bonds, discussing their yields and the perception of inflation in Canada. Furthermore, it identifies key factors influencing industry ratings, such as sovereign risk and corporate governance. The analysis is supported by references to Suncor.com, Bankofcanada.ca, and other financial resources.

Running head: FINANCE
Finance
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Table of Contents
1. Indicating the implied growth of Suncor, while providing adequate explanation:................2
2. Explaining the advantage of investing in exchange traded funds relative to buying stocks:.2
3. Comparing short term and real return bond, while indicates the perception of inflation for
the coming year:.........................................................................................................................3
4. Indicating the key factors in determining ratings for the industry that has been selected:....3
References and Bibliography:....................................................................................................5

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1. Indicating the implied growth of Suncor, while providing adequate explanation:
Implied Growth Rate
Calculator Value
Share Price $ 33.64
Estimated Growth Rate 5.0%
Current Annual Dividend $ 1.08
Risk-Free Rate 3.0%
Estimated Market Return 10.9%
Beta 1.16
1 Year Forward Dividend $ 1.13
Discount Rate 15.7%
Implied Growth Rate: 12.3%
The above table indicated the overall implied growth rate of Suncor, which is mainly
at the levels of 12.3%. The implied growth rate is mainly reasonable, as the overall returns of
the stock needs to be in accordance with market return. The current P/E ratio is mainly at the
levels of 16.68 for Suncor, which directly indicates the possible to future growth in prices of
the stock. After analysing both implied growth rate and P/E ratio, it can be detected that
growth in share price of Suncor is estimated, which might eventually generate high rate of
returns from investment (Suncor.com, 2018).
2. Explaining the advantage of investing in exchange traded funds relative to buying
stocks:
The major advantage of exchange traded fund is to curb the risk and maximise the
level of returns from investment. There are certain advantages of exchange traded fund,
which are depicted as follows.
 Diversification is relevantly conducted as one of the major components of exchange
traded fund, which allows investor to minimise the risk from investment and maximise
the return from investment.

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 The second major advantage of Exchange traded fund is the low fees that is charged in
comparison to the managed funds.
 Furthermore, the exchange trade funds can be bought and sold as normal stock, which
allows investor to maximise the overall returns from investment.
3. Comparing short term and real return bond, while indicates the perception of
inflation for the coming year:
The real return bond yield is mainly at the levels of 0.84%, while the overall short-
term bond yield is mainly at 2.33% (Bankofcanada.ca, 2018). The real return bond directly
has high time for maturity, which relevantly lowers the overall yield, while the short duration
of the bond raises the yield of the bond. The inflation rate of Canada is mainly at the levels of
2.57% as of 2018, which has relevantly allowed the organisation to generate higher rate of
returns. However, in the coming years as per the current trajectory of the Canadian
government the overall inflation of the country will eventually decline and will be contained
within 2.15%.
4. Indicating the key factors in determining ratings for the industry that has been
selected:
Specific key factors can be detected for identifying the rating of the industry, which
are depicted as follows.
 Sovereign risk is mainly conducted for identifying the overall credit risk, which might
eventually help in determining the overall credit rating of the industry. The credit rating
directly allows the investor to undertrained the return generating capturability of the
stock.

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 Corporate governance is also an adequate measure which helps in determining the credit
rating of the company, as the high ethical operations will eventually improve financial
progress of the stock.

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References and Bibliography:
Bankofcanada.ca. (2018). Bankofcanada.ca. Retrieved 11 November 2018, from
https://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/
Blackrock.com. (2018). BlackRock. Retrieved 11 November 2018, from
https://www.blackrock.com/ca/individual/en/products/239832/ishares-sptsx-60-index-
etfLinks%20to%20an%20external%20site?nc=true&siteEntryPassthrough=true
Finance.yahoo.com. (2018). Finance.yahoo.com. Retrieved 11 November 2018, from
https://finance.yahoo.com/quote/SU/
Suncor.com. (2018). Suncor.com. Retrieved 11 November 2018, from
https://www.suncor.com/investor-centre/stock-information/dividends