Follow the steps below to complete this assignment:
In general terms, what does your project address? Why is it important? Where does is fit in the overall field? The purpose of the introduction is to provoke the interest of the reader and to convince the reader that the topic is newsworthy and appeals to a reasonably wide audience.
How is sustainable funds assess sustainable investments – An investigation of how fund managers of sustainable funds assess investments using ESG-factors:Discuss?
Part 2 (Excel):
Consider now a market where three funds can be traded, and you want to understand which is the
best investment for you, based on all the performance measurement tools learned in class. The
numbers are:
( ) Beta Tracking Error
Fund 1 10.50% 16.50% 0.10 18.00%
Fund 2 16.50% 23.50% 1.10 21.00%
Fund 3 35.50% 32.00% 0.50 22.50%
Index 15.00% 18.50%
Risk-free 1.25%
Write the solution in Section 2 of the excel and answer the following questions as well:
Which fund(s) outperform the benchmark (index)?
Which portfolio offers the highest compensation for risk?
Which fund has the most consistent performance over
time?
Detailed problem description
Why might the fund management be interested in diversification into emerging markets? Are they right to recommend such a diversification? Answer these questions citing some empirical evidence.
Obtain monthly total return index data for the following 5 equity markets indexes, in US dollar terms, for the 5-year period from October 2016 to September 2020 (the names of the corresponding indices provided in parentheses), plus two financial asset indexes f your choices: (Bonds, Commodities, Derivatives, Cash indexes etc)
US (MSCI USA)
Europe (MSCI EUROPE U$)
Japan (MSCI JAPAN U$)
Pacific, excl. Japan (MSCI PACIFIC EX JP U$)
Latin America (MSCI EM LATIN AMERICA U$)
Index 1
Index 2
Compute monthly returns for each series. Obtain the current US risk-free rate of interest.1 Compute the mean and standard deviation of each series and the variance-covariance matrix. Obtain monthly total return index for the US dollar-based MSCI World equity index (MSCI WORLD U$) and compute its returns.3- In order to estimate expected returns, you decide to use the CAPM. Estimate the beta of the six indices listed above with respect to the MSCI All Country index. Use these estimates of beta in order to compute the CAPM expected return of these 7 indices.
Compute the efficient frontier for (i) the first three markets (i.e. US, Europe, Japan) and (ii) all the 7 markets considered. Assume that investors can borrow and lend at the risk free rate of interest and that they are able to take short positions. How does diversification into emerging markets or other assets affect the efficient set?
In the light of existing empirical evidence and your own findings, what are your recommendations? Should the fund expand on emerging markets, consider new assets or focus to its current strategy.
Suppose that your fund is not allowed to take short positions in any of the markets. How would such a restriction affect the conclusion you have drawn in Questions 4 and 5?
Critically reflect on the limitations of your analysis.
Evaluate the major strategic decisions made during the six-round BSG simulation.
Reflect on one round that stood out, why and key lessons learnt.
2. Reflect on relevant theoretical frameworks applicable to understanding the internal,
external and competitive environments of your business; and discuss how these
frameworks helped in shaping decisions made in your BSG.
3. Critically evaluate the impact of ONE specific emerging technology on the
future of your business and make useful recommendations to future managers.
4. Present a high standard and professional reflective report.
Provide a detailed overview of the stock of the publicly traded U.S. corporation you selected in the assignment of Week 4.
Provide the rationale for your selection and plans for a diversified portfolio.
Select five financial ratios, then analyze the past three years of financial data for the investment (please obtain data from the financial statements or the equivalent).
Analyze the price of the investment to stock market beta for the past five years.
Create a trend line that depicts the price movement for the investment against the market index movement using elements of Microsoft Office, such as Excel, Visio, MS Project, or one of their equivalents (such as Open Project, Dia, and OpenOffice), as appropriate. Note: The graphically depicted solution is not included in the required page length.
Determine the type of investor who would be the best candidate for the chosen investment (e.g., a risk-averse investor, an aggressive investor, a broker, and a dealer in the market).
Provide a rationale for why this investment is a solid choice. Support your assertion that someone with the investor profile you outlined should invest in this stock.
In the third part, choose at least 1 option contract. The option can be a hedging position or a purely speculative position or both. If it is used for hedging, demonstrate how the position protect value of the overall portfolio. If the option position is speculative, explain your rationale and justify the investment .
Backtest the portfolio using stock prices from 4th October to 6th December 2021, how did the portfolio perform against a chosen benchmark? What is return and risk of the portfolio?discuss which portfolio performs better during the back testing period, the benchmark or your portfolio? Explain in detail why the portfolio performs better (or worse) than the benchmark. Bloomberg portfolio management function (PORT) can help with this task.
As a quality assurance, present a scenario analysis to the client. Hypothetical analysis of the portfolio if a crisis (in scale similar to COVID-19 or the 2008 crisis) strikes. Is your portfolio crisis proof? Why? If not, how can you reduce exposure to a financial crisis. Analysis do not need to be quantitative, discursive discussion is fine.
How Private Equity works and how the approach differs between venture, growth and buyout
investments.
How a commercial view of the investment impacts on valuation, risk and transaction structures.
How to evaluate risk; and
What other considerations an investor should take into account when making the investment.
What will your investment portfolio be worth in 10 years? In 20 years? When you stop working? The Human Resources Department at Four Corners Corporation was asked to develop a financial planning model that would help employees address these questions.
Tom Gifford was asked to lead this effort and decided to begin by developing a financial plan for himself. Tom has a degree in business and, at the age of 40, is making $85,000 per year.
Through contributions to his company’s retirement program and the receipt of a small inheritance, Tom has accumulated a portfolio valued at $50,000. Tom plans to work 20 more years and hopes to accumulate a portfolio valued at $1,000,000. Can he do it?
Tom began with a few assumptions about his future salary, his new investment contributions, and his portfolio growth rate. He assumed a 5% annual salary growth rate and plans to make new investment contributions at 6% of his salary.
After some research on historical stock market performance, Tom decided that a 10% annual portfolio growth rate was reasonable. Using these assumptions, Tom developed the following Excel worksheet:
A A B C D E F C
1 Four Corners
2
3 Age 40
4
S Current Salary 585.000
Current Portfolio 350.000
6 Annual Investment Rate 6%
7
8 Salary Growth Rate 5%
Portfolio Growth Rate 10%
9
10
11
12
13
14
15 Year Beginning Balance Salary New Investment Earnings Ending Balance Age
I 350.000 585.000 $5,100 $5255 560.355 41
2 S60,355 389.250 $5,355 56.303 $72,013 42
3 $72,013 $93,713 $5,623 $7,482 $85,118 43
4 585,118 $98,398 $5,904 58.807 $99,829 44
5 $99,829 $103.318 $6,199 $10.293 $116,321 45
1. In the first part of the portfolio, choose minimum of 5 stocks. You can consider equity stock in any financial market, and choose any market available in Bloomberg, but you are limited to trade only equity stocks (no ETFs nor index fluids) on major exchanges. You need to explain to the client choices of each stock. To convince her that these stocks are good financial bet, your analysis and discussion should include aspects such as: choice of a particular market; its overview and major characteristics; stocks’ valuation expectation of the stocks’ future performance; the criteria used to select stocks; capital allocation of each stock; reasons of allocation etc. Bloomberg equity screening function (EQS) can help with this task.
2. In the second part, choose minimum of 5 ETFs or index funds. Justify your selection, apply the same analysis and rationale as above. But you are limited to trade only ETFs and index funds in this part.
3. In the third part, choose at least 1 option contract. The option can be a hedging position or a purely speculative position or both. If it is used for hedging, demonstrate how the position protect value of the overall portfolio. If the option position is speculative, explain your rationale and justify the investment thesis.
4. Backtest the portfolio using stock prices from 4th October to 6th December 2021, how did the portfolio perform against a chosen benchmark? What is return and risk of the portfolio? Please discuss which portfolio performs better during the back testing period, the benchmark or your portfolio? Explain in detail why the portfolio performs better (or worse) than the benchmark. Bloomberg portfolio management function (PORT) can help with this task.
5. As a quality assurance, present a scenario analysis to the client. Hypothetical analysis of the portfolio if a crisis (in scale similar to COVID-19 or the 2008 crisis) strikes. Is your portfolio crisis proof? Why? If not, how can you reduce exposure to a financial crisis. Analysis do not need to be quantitative, discursive discussion is fine.
