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PORTIFOLIO MANAGEMENT
Requirement and Instructions
Please read the following instructions carefully.
Key Assessment Requirements
1. Analyse the scenarios presented in each question.
2. Present clear recommendations where required
3. Show all logical analytical steps (calculations) used to arrive at conclusions
4. Present a critical report of your analysis and responses to all questions
5. Where appropriate, present key Finance and Economic theories to support your answers together with any assumptions you choose to use in your analysis and any practical implications that these may have.
Submission Requirements
6. You need to submit an electronic copy (Word Document) of your work via the VLE during the submission period.
7. You need to submit an Excel spreadsheet with ALL the calculations made via the VLE during the submission period.
8. Your work should be uploaded into the VLE via a dedicated submission link to be provided.
9. Do not send your completed work via email. Under no circumstances will the work be accepted when emailed to any member of the faculty.
10. Note that there are penalties for late submission. Any work submitted after the designated deadline will not be marked.
Referencing
11. You need to follow a proper referencing system in your paper.
12. You also need to do a full bibliography of your sources.
Number of words
13. There is no restriction on the number of words for this assessment but there is also no need to answer questions that are not asked. It is equally not necessary to present any arguments that are not relevant to the specific questions on which you are being assessed.
There are 4 questions in total. You are required to answer all the Questions in full. Marks are allocated to each question as follows;
Question Allocated Marks
1 20
2 20
3 30
4 30
Each question may have more than one section and you are required to complete all sections for all questions. The marks allocated to each section where applicable are also shown in the relevant section of the question.
There are 4 questions in total. You are required to answer all the Questions in full. Each question may have more than one section and you are required to complete all sections for all questions. The marks allocated to each section are shown in the relevant section of the question.
Question 1
a. Choose five companies quoted on the London Stock Exchange and calculate their Piotroski F-Scores. Show your workings.
[10 marks]
b. Choose two of these companies and carry out a fundamental valuation of the fair value of their share price using a Dividend Discount Model of your choice. State and justify all your assumptions.
[10 marks]
Total [20 marks]
Question 2
You are Chief Investment Officer at Aldgate Investments. You are concerned that the results of the forthcoming general election in the UK are very uncertain, and could lead to a period of extreme economic uncertainty for UK investors. An unexpected clear mandate for a strong government could lead to a resurgence in markets; whereas if no party can form a government there could be a prolonged period of instability for markets and interest rates.
Write a memo to your investment team advising them of steps you want them to take in managing your UK client discretionary portfolios to protect them as much as possible from any potential instability in equity and bond markets.
You are aware than some of your investment managers are relatively junior and have only experienced rising asset prices. Include in your report an explanation of your concerns and why you want them to take the steps you suggest.
Total [20 marks]
Question 3
Explain the difference to an investor between holding a long European Call and holding a short European Put position on a company’s shares.
[ 5 marks]
Illustrate your answer with labelled payoff diagrams using information on a company of your choice available at the link below:
Explain how these derivative positions differ from an investor holding a long position on the company’s shares.
[25 marks]
Total [30 marks]
Question 4
Using the FTSE Indices Total Return data provided produce a spreadsheet that contains:
a. The monthly total returns for each index, the mean return over the period, and the standard deviation of those returns.
[5 marks]
Create charts showing the possible risk and return combinations of 2 indices for each of the 3 different combinations
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