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MNGT7904 Money Management Assignment - University of Cumbria, UK

Question 1: Investing in a specific company - 1000 words

Choose a company in a part of the world and domain where you feel at ease with daily quotes and which issue dividends (e.g. you can select a component of the S&P 500, Nasdaq, SMI (Swiss Market Index) or any European market)

Describe the company, consider the recent performance (take five years) of the shares have selected. That means that you have to research the price of the chosen share five years ago and today. In addition you must establish what dividends were paid. Then using one of the techniques covered in the course (discounted cash flow or end value with dividends carried forward with a stated interest rate), establish the historical return on investment.

You can find the data on share price. Look under "sector summary", select a sector you like, then a company for your research. To find data on dividends, you can look at the company web site (which is listed on the page of finance.google.com devoted to your company.

You may use other data sources is you prefer.

Question 2: An investment strategy based on funds - 3000 words

To answer this question you are to develop an investment strategy specifically for yourself, and as realistic as possible, and reflecting your view of macroeconomics and its impact on financial markets.

First analyse your own situation and risk profile (character, life-style, time horizon, objectives, etc) and then your macro-economic view, which should spell out your view of global economic trends and how they affect your choice of funds.

Then, as a reflection of your risk profile and economic view, determine your asset allocation and justify it. That implies the mix of shares, bond, possibly commodities and cash. Select a portfolio of mutual funds or ETFs using examples and providers chosen from David Costa's book. You may however also use any mutual fund or ETF.

Normally five to seven mutual funds and ETFs funds will suffice for diversification. Bring an element of timing into your investment plan.

You are not obliged to use ETFs only or Funds only; make you choices and say why. That will require you to describe the funds and the rationale for including them in your portfolio.

Note that for this exercise you may not include stocks or bonds directly in this portfolio, only ETFs or Funds. To fully address the question you need to produce a portfolio similar to the ones presented in the textbook and the video lectures.

Question 3: Invest in a bond - 500 words

Select a government or corporate bond and explain why you picked that particular bond and what your estimated return will be if you hold the bond till maturity.

You must use the Harvard referencing system.

The final assessment covers the three main themes of the course: shares, funds and bonds.

Q1. First you must find a company that has provided dividends. Describe the company succinctly. For the return on investment consider that you (hypothetically) bought stock five years ago and sold today. You obviously need the purchase and selling price. You also need the dividends and you must consider the time value of the cash flow. You may choose between a DCF type of methodology and the technique of investing dividends in a savings account. In the former you work out the IRR of the cash flows. For the latter, accrue interest on the dividends and add their future value to the share's selling price. Work out the average annual return on investment. Note: AVERAGE ANNUAL and it had better be a geometric average!

Q2. There is a lot in Q2, and we are on that presently from Unit 5 onward. Be sure your self-analysis leads to a risk profile in terms of type of portfolio you go for. Here, I would like to make clear to the class that the only risk profiles that you should use in the final assessment are these from the textbook or the BCGE brochure. In my view, part of the assessment is being able to analyse your own risk profile using your own criteria; please avoid any web based tool to determine your investment profile. Add your view on the macro-economic outlook for whatever country/(ies) and currency/(ies) you invest in. Your portfolio must reflect these factors. Please absorb Dr. Costa's tutorials well. Do bring forward why you prefer managed funds or exchange-traded funds, or some mixture of the two. For this exercise you are obliged to choose funds - of any type, but funds (not bonds, not stocks -except via funds). Describe the funds. Do so in your own words (avoid copy/pasting of text or charts). Include a mention of costs and why you like the funds. I'd recommend 5 -7 altogether. For a really good grade you need to break down the security types within the funds to ensure they match your portfolio profile. You may, but are not obliged to, add a structured product to your portfolio.

Q3. Choose a government or corporate bond (or supranational) and establish the YTM. Explain your choice in terms of currency and risk profile and the number of years to maturity. Please show the IRR calculation AS an EXCEL spreadsheet, not just copy whatever a Website gives you as a result.

Attachment:- Money Management Assignment Files.rar