Week 1 Collaboration
Collaboration: Changes since the financial crisis
The financial system has changed
dramatically since the 2008 financial crisis (which actually started in 2007).
Also known as the Global Financial Crisis, it is considered by many to have
been the worst financial crisis since the Great Depression in the 1930s. The
financial crisis was triggered by a complex interplay of US real estate
overvaluation, policies that encouraged home ownership, questionable trading
and a myriad of other issues.
During this week, you have already
examined (via your Weekly Overview and Learning Resources) some of the ways in
which the system has changed because of (or as a reaction to) said crisis.
Moreover, you have done so while considering such themes as political economy
and analysis of risk.
Equipped with this knowledge, in your
first Collaboration, you will analyse how the financial markets in your own
country have changed as a result of the recent financial crisis.
To prepare for this Collaboration:
Identify the financial markets
available in the country in which you reside.
Research how those financial markets
have changed since the beginning of the financial crisis.
Identify the responses, if any, of your
country’s government, regulators and industries to the financial crisis.
To complete this Collaboration:
By Sunday (Day 4):
For your Initial Response, in
approximately 750–1,000 words, address the following issues/questions:
Outline the main financial markets that
are available in your country.
Critically analyse how financial
markets in your country have changed since the recent financial crisis.
Evaluate how the government, regulators
and industries of your country responded to the financial crisis. Explain what
you based your evaluation on and justify your reasoning.
Fully justify all your assumptions and
claims using your own experience, the Learning Resources and your own research.
Cite your work using the Harvard Liverpool Referencing System.
Submit your Initial Response to Turnitin and to
the Collaboration forum.
Until Wednesday (Day 7):
Participate in the Collaboration Forum by
posting 3 to 5 responses to your colleagues in which you:
Compare a colleague’s country’s
financial market to your own
Open a debate about an analysis with
which you disagree
Offer contributions based upon your
prior experience
Extend the discussion into new but
relevant areas
Model or promote critical reflection
from what you have read
You should aim to participate with follow-on
postings to your colleagues’ responses, making 3–5 significant follow-up
postings. Aim to spread your total collaboration discussions across 3 separate
days of each week.
Your collaborative participation will
be assessed in three segments. Following the completion of Week 3, you will
receive summative feedback and an initial grade based upon your participation
in Weeks 1–3. At the end of the Week 5, you will receive additional summative
feedback and a second grade based upon your participation in Weeks 4 and 5. At
the end of the module, you will receive further summative feedback and a third
grade based upon your participation in Weeks 6–8. These three assessment points
will each form 5% of your End of Module grade, for a total of 15% for your
participation posts overall.
Week
2 Collaboration
Role
of diversification and assets: Part 1
The actual realised
return on investment is based on many factors, including characteristics of
assets used by investors. In general, investors are attracted to opportunities
that are domestic in nature, as opposed to international and other far-distant
opportunities. Therefore, a smart foundation for a savvy investor is to study
the main assets used by investors of their own country. If you have not
already, take a moment to review the Weekly Overview and consider how the
topics apply to the typical assets of your own country. This will help inform
your Collaboration this week, as your challenge is to emulate those savvy
investors and analyse the assets primarily utilised by the investors in your
home country.
To
prepare for this Collaboration:
Review this
week’s Learning Resources and Weekly Overview with a focus diversification.
Research the
main assets used by investors within your country.
Identify the
asset classes of your country.
To
complete this Collaboration:
By Sunday (Day
4), in a response
of approximately 750–1,000 words, address the following issues/questions:
·
Describe the main assets used by
investors in your country.
·
Evaluate the extent to which
diversification is possible.
·
Analyse any major asset classes that
are missing.
·
Analyse any asset classes unique to
your country.
·
Based on your analysis of this asset
characterisation of your country, evaluate whether investors in this country
have any unique advantages or disadvantages.
Submit your
initial response to the Turnitin link provided and post to the Collaboration
forum.
By Wednesday
(Day 7), post three to
five responses to your colleagues by:
Comparing a
colleague’s asset characterisation analysis to your own
Opening a
debate about an analysis with which you disagree
Offering
contributions based upon your prior experience
Extending the
discussion into new but relevant areas
Modelling or
promoting critical reflection from what you have read
Your
collaborative participation will be assessed in three segments. Following the
completion of Week 3, you will receive summative feedback and an initial grade
based upon your participation in Weeks 1–3. At the end of the Week 5, you will
receive additional summative feedback and a second grade based upon your participation
in Weeks 4 and 5. At the end of the module, you will receive further summative
feedback and a third grade based upon your participation in Weeks 6–8. These
three assessment points will each form 5% of your End of Module grade, with a
total of 15% for your participation posts overall.
Please note
that you should spread your three to five weekly collaborative participation
responses over a minimum of 3 separate days for each week. This will help maximise the value of your
collaboration with colleagues and serve to meet the learning objectives for
each activity.
Click on the Reply
button below to reveal the textbox for entering your message. Then click on the
Submit button to post your message.
Personal Development
Plan
This
week you will start writing your Personal Development Plan (PDP).
The
purpose and focus of the PDP is to develop a plan for how you will succeed in
achieving your goals for this module and, consequently, for your program as a
whole.
To prepare for this PDP:
Begin
by identifying the key insights gained through a review of the goals and
objectives of the module to date, as well as the activities carried out in the
module so far.
Reflect
on the emerging themes from the discussions within the Collaboration area, as
well as your Learning Resources and conversations with others within your
group. Consider how the concepts, theory and processes introduced in this
module so far fit in with previous modules you have completed.
You
should identify and briefly summarise two topics discussed in the Collaborations
that have provided new insights regarding investment strategies and the topics
covered so far. Then, develop an outline of the main areas of your PDP as it
relates to your goals for this module as well as for your program. Having a set
of clearly articulated goals and a plan for reaching them, as well as knowledge
of where to turn for help, will allow you to keep focused on those goals and
ensure you have the support necessary to achieve them.
Are
there topics discussed that could have professional or personal application for
you? Consider how the concepts, theories and processes learned in this module
align with previous modules you have completed.
You
can develop the outline as you deem appropriate, choosing the areas in which
you wish to develop your expertise. Include areas in which you may already have
expertise. Consider the PDP as an opportunity to also let your Instructor know
about areas you may be having difficulty with.
Your
final PDP submission in Week 8 should be approximately 1,500-2,000 words.
To complete this PDP:
By Wednesday (Day 7):
Submit
an approximately 250-word response addressing the noted areas and also laying
the groundwork for the Week 8 PDP.
This assignment is not graded, but you
will receive feedback from your Instructor to help you improve your work.
Please take advantage of this opportunity to learn from your Instructor's
feedback -- give the assignment your full effort and ask for clarification on
any feedback you do not understand.
PDP forward thinking (Week 8)
As
you start to think about your PDP this week, you may find it helpful to
consider what you are working towards for Week 8. With this in mind, the Final
Submission requirements are posted for you here:
The
final PDP assignment will be a private submission to the Instructor and will
challenge you to demonstrate your ability to reflect on the learning outcomes
of the module as well as the following subject areas:
Your
strategic awareness
Questions
of ethics
Other
disciplines already studied and how they relate to the content and concepts of
this module (link to previous
classes)
Your
cultural awareness
Your
career/role
You
should look back at the entire module
and prepare a paper that synthesises the activities of the class and your
knowledge gained for the whole 8-week period. Do not just rehash the textbook and Weekly Notes.
Please
address the following in your response:
·
How important do you
now view investment strategies to be in relation to strategic decision-making?
Has the module changed your opinions in this regard? Has the module led to
greater insight about your workplace and its functioning?
·
Do you feel that you
have improved your key skills (report writing, time management, excel use etc.)
as a result of your experiences with this module?
·
How did the overall module
materials help you in your personal or professional life? (This question is
particularly important.)
·
What ethical and
cultural issues have you considered to be important in this module, and how
have they influenced your views of global business?
·
How do you feel about
your own professional skills in terms of communicating your ideas both through
the asynchronous (My Working Group, plus the Main Discussion Board) and the
synchronous (Virtual Meeting Room) online platforms?
·
How do you feel the
collaborative learning with peers through both the My Working Group and Virtual
Meeting Room helped you develop your own ideas around the module topics? What
did you like/dislike about the overall module? Are there ways in which you feel
that your educational experience could have been improved?
·
What progress has
taken place in achieving the goals identified for this module in your Week 4
PDP?
·
What challenges did
you face, and what insights did you gain from the Module Project?
As
you may know, at the end of your programme, you will be writing a dissertation
based on a research topic you develop. Sometimes students reach the end of the
programme without thinking about a research topic and then have difficulty
finding a topic. The modules in the programme present opportunities for
identifying possible topics that may be of interest for you to research for
your dissertation. The research articles you review and write about also are
sources of ideas. So it is a good idea to start listing possible research
topics, if any, in your PDPs so that you can refer to them and have a selection
to choose from later. It can save you a great deal of time and effort and lead
to a much better research experience if you have developed ideas to follow up
for research. Did you find any ideas in this
module that interest you? If so, please list and provide a brief summary of
your topic idea(s). Also be aware that there will be a specific section in your
dissertation based upon your PDPs.
Week 3 Collaboration
Role
of diversification and assets: Part 2
What
determines the price of stocks in the open market? The answer might seem clear
at first, but depending on the investment theory you prefer, that answer might
differ more than you think. For example, efficient market hypothesis (EMH)
theories state that stock market prices reflect relevant information, thus
stocks are always tradable at fair values. None are ever undervalued or
inflated. Considering this, for this Collaboration, you will continue your
discussions from last week, which focused on the concept of return on
investment. As you might expect, you will build upon that discussion by
focusing on the noted EMH theories as well as pricing asset theories.
To prepare for this Collaboration:
Review this week’s Learning Resources
with a focus efficient market hypothesis theory.
Review the Week 2 Collaboration as
necessary.
Research at least one recent (and
major) financial or economic event of interest to you.
Reflect on the effects of this event on
market prices.
As
you'll have seen, you are NOT required to submit an Initial Collaboration post
this week. However, below are some reflections and questions just to get our
discussions going. In your discussion consider and respond to the following:
· Summarising
at least one recent, and major, financial or economic event.
· Analysing
how information about this event was incorporated into the market price of the
stock.
· Explaining
why use of information occurred, using arguments coming from asset pricing
theories and EMH.
· Explaining
your views on your researched financial or economic event. Fully justify all
your assumptions and claims using your own experience, the Learning Resources
and your own research.
Cite
your work using the Harvard Liverpool Referencing System. Please provide your
views (with appropriate underlying research) on one or more of the above
topics. You can start responding as soon as you like and to the above.
A
Summative Grade will be awarded in Week 3, based upon your Participation in
Weeks 1, 2 and 3.
Click
on the Reply button below to reveal the textbox for entering your
message. Then click on the Submit button to post your message.
Group Case Study
In
your group, collect time series information about the performance of an
internationally traded stock and calculate the rate of return that has been
achieved in recent years. You should calculate annual, quarterly and monthly
rates of return. Try to collect at last 10 years of data.
Your
report will be in a submission of 1,000 to 1,500 words, which must address the
following:
· Compare
the different measures and explain the average return and the deviations from
this return.
· Collect
similar data of the market-wide index (in the same country) and calculate the
market beta of the stock using annual, quarterly and monthly data. Explain your
findings within the context of the CAPM theory.
Fully
justify all your assumptions and claims using your own experience, the Learning
Resources and your own research. Cite your work using the Harvard Liverpool
Referencing System
Module Project Week 3
Project proposal
This
week, you will submit a project proposal (1,000 words total) for your Module
Project. In this proposal, you will be expected to describe the scope, aims and
objectives of the Module Project, as they relate to your chosen client and with
reference to each proposed chapter of your Module Project submission.
As
you may recall from Week 1, the project for this module is all about developing
investment strategies for a hypothetical client of your choice. Your project
will evaluate various strategies and ultimately present a report aimed at
convincing your client to allow you to invest on his or her behalf.
In
Week 3, you are to submit your first project proposal submission of around 1,000
words. In this, you must complete the following:
·
Describe the scope,
aims and objectives of the Module Project, as related to your chosen client and
with reference to each proposed chapter of your Module Project submission.
·
Demonstrate an
understanding of links to the related underlying academic literature that you
will reference in your Module Project.
·
Describe key steps
and milestones for your ongoing and planned research, plus how you are planning
to achieve these by your final Week 7 deadline.
Your
proposal must include the Introduction, which will contain the following:
·
Identification and
description of the person you have chosen to represent (that person’s
profession etc.).
·
The country where
your client will live.
·
Provide a broad
outline of the client. Start with the client’s resources (income and assets)
and think about his or her liabilities. Discuss the client’s interests and
hopes and fears. This may not be part of the final report, but it will provide
the basis for your advice. It may be considered as the notes that you have
taken from your initial interview with your new client. It should be based on
the outline of the client that is provided.
·
Make a clear list of
the client’s financial needs and financial assets. One way that you could do
this would be to present a personal balance sheet (statement of financial
position) for the person you would advise. Then, identify that person’s assets
and his or her liabilities.
Week
4 Collaboration
Premia in stock markets
Empirical evidence shows the existence of small-large
and value-growth premia in stock markets, thus an understanding of these premia
in stock markets is a valuable tool for your professional practices in
investment. Why is this valuable? As an example, if there is a risk that a
mature payment will not be paid, investors tend to demand a higher return. In
other words, if there is a high risk of default or a credit event, this will
require additional return as compensation. With all this in mind, for this Collaboration
you will investigate premia in your own country and discuss the associated
risks and returns.
To prepare for this Collaboration:
Review your Learning Resources with a focus on premia
factors.
Research small-large and value-growth premia in stock
markets within your country.
Reflect on how these factors impact expected returns.
To complete this Collaboration:
By Sunday (Day 4), in a response of approximately
750–1,000 words, address the following issues/questions:
·
Summarise the evidence you found regarding small-large
and value-growth premia in stock markets within your country.
·
Analyse how the fundamental risk factors drive
expected returns.
·
Based on your analysis, critically evaluate why these
premia might exist.
Submit your initial response to the Turnitin link
provided and post to the Collaboration forum.
By Wednesday (Day 7), post three to five responses to
your colleagues by:
Opening a debate about premia in stock markets with
which you disagree
Offering contributions based upon your prior
experience
Extending the discussion into new but relevant areas
Modelling or promoting critical reflection from what
you have read
Your collaborative participation will be assessed in
three segments. Following the completion of Week 3, you will receive summative
feedback and an initial grade based upon your participation in Weeks 1–3. At
the end of the Week 5, you will receive additional summative feedback and a
second grade based upon your participation in Weeks 4 and 5. At the end of the
module, you will receive further summative feedback and a third grade based
upon your participation in Weeks 6–8. These three assessment points will each
form 5% of your End of Module grade, with a total of 15% for your participation
posts overall.
Please note that you should spread your three to five
weekly collaborative participation responses over a minimum of 3 separate days
for each week. This will help maximise the value of your collaboration with
colleagues and serve to meet the learning objectives for each activity.
Click on the Reply
button below to reveal the textbox for entering your message. Then click on the
Submit button to post your
message.
Week
4 Personal Development Plan
This week, the PDP assignment that started in Week 2
is to be continued. As was done in Week 2, you will reflect upon the key
insights you have gained through a review of the goals and objectives of this
module to date. Moreover, you must identify the activities carried out in the
module so far and reflect on the emerging themes from the Collaborations within
the collaboration area as well as your Learning Resources and conversations
with your colleagues. Additionally, consider how the concepts, theory and
processes learned in this module fit in with previous modules you have
completed, as well as their impact on your personal and professional goals.
To
prepare for this Assignment:
Reflect upon your learning thus far in this module.
Review your Learning Resources and learning activities
from the last 4 weeks as necessary.
Consider how the concepts, theory and processes you
have learned in this module align with previous modules you have completed.
Identify your personal and professional goals for this
module and programme.
Reflect on how your learning has impacted those goals
thus far.
To
complete this Assignment:
By Wednesday (Day 7), submit an
approximately 750-word critical reflection addressing the following:
·
Develop an outline of the main areas of your PDP as it
relates to your goals for this module as well as for your programme.
·
Explain your goals and your plan for reaching them.
This assignment should be prepared and submitted to
Turnitin using the Word (.doc or .docx) format no later than midnight your
local time.
Week 5 Collaboration:
Yield curve and interest rates
Review
this week’s Learning Resources with a focus on yield curve. Research yield
curve information for a country of your choosing. Reflect on how this yield
curve may impact interest rates.
Until Wednesday (Day 7): Continue to participate by engaging in
a discussion with your colleagues, replying to each other’s posts:
In
this Collaboration you reflect on theories as they apply to bond markets across
the globe.
As
an investor, one way of evaluating a bond would be to look at what the current
price implies for the yield to maturity as well as considering whether that
offers sufficient return for the amount of risk that is being taken. Recall
that the yield curve provides an overview of the yield to maturity for a range
of bonds with different maturities. That said, there are a number of different
theories about what determines the slope or shape of the yield curve (i.e.
expectations theory, liquidity preference theory and segmented market theory).
As
you complete this week’s Collaboration, reflect on these different theories as
they apply to different bond markets across the globe.
To prepare for this Collaboration:
To complete this Collaboration:
In
Week 5, you are not required to submit an Initial Collaboration post. You will,
however, find that your Instructor has posted some initial questions in the
Discussion Board Week 3 Collaboration Thread to help stimulate your subsequent
debates.
You
should aim to participate with follow-on postings to your colleagues’
responses, making 3–5 significant follow-up postings. Aim to spread your total
collaboration discussions across 3 separate days of each week.
A Summative Grade will be awarded in Week 5, based upon
your Participation in Weeks 4 and 5.
Click
on the Reply button below to reveal the textbox for entering your message. Then
click on the Submit button to post your message.
Week 5 Collaboration
Group Case Study
This
week, you work on your second Collaboration Group Case Study in the My Working
Group Folder to which you have been assigned.
Yield
curve and interest rates play a pivotal role in evaluating investments such as
bonds.
Focusing
on these topics, for this week’s Group Case Study, reflect on the different
theories associated with yield curve, interest rates and growth as they apply
to different bond markets across the globe.
By Wednesday (Day 7):
Keeping
this in mind, your team will select a country and research its bond market.
·
Based on this
research, and in a submission of
1,000–1,500 words, address the following:
·
Identify the major
players (buyers and sellers) within your country’s bond market.
·
Describe the yield
curve in your country and explain what it says about the current outlook for
interest rates.
·
Analyse how yield
curve in your country compares to your own expectations about how interest
rates and economic growth will evolve in the future.
·
Explain whether there
is a difference between the market and your view and how you could profitably
take advantage of it.
Fully
justify all your assumptions and claims using your own experience, the Learning
Resources and your own research. Cite your work using the Harvard Liverpool
Referencing System.
Please
submit your case study to the Turnitin link.
Additionally,
submit your audit report, and any Excel spreadsheets you decide to use as part
of your submission, to the Team Audit Report link.
When
submitting your assignment, be sure to clearly specify the responsibilities of
each team member in your audit report. Only one submission is required per
group.
To
access the Group Forum to which you have been assigned, click on the "Week
5 Group Forum" link.
To
submit your case study to Turnitin, click on the "View/Complete" link
for Week 5 Collaboration Group Case Study--Turnitin.
To
submit your brief Team Audit Report, click on the "Week 5 Team Audit
Report" link, and attach any other supporting Excel attachments you decide
to use in your submission
Week 5 Module Project:
Steps 3-4
You
continue working on your Module Project in which you are developing investment
strategies for a hypothetical client of your choosing.
Keep
in mind that during this project, you must evaluate various investment
strategies and ultimately present a report aimed at convincing a client to
allow you to invest on his or her behalf.
For
this next deliverable, you will submit the third and fourth steps highlighted
in the overall Module Project outline presented in Week 1.
To complete this Module
Project:
By Wednesday (Day 7):
For
this submission, complete the following:
Step 3: Carry out the asset allocation
(3-6 A4 pages)
Outline
the asset allocation of the portfolio that you will recommend. What percentage
of cash, bonds and stock will you recommend the client hold? What sort of risk
and return do you anticipate? How do you make these assessments? What is the
level of risk that you suggest the client take? Remember to provide support for
what you advise. Make sure that you relate this asset allocation to the risk
assessment that you have assumed in Step 2.
Consider
the issue of liquidity. How much cash is required at each moment? What are the
risks involved in holding more illiquid assets? Are these risks justified? This
asset allocation should include a consideration of alternative assets and
foreign securities. What does the inclusion of these alternatives do to risk and
return? You may support your asset allocation decision with reference to a view
of the economy. You may also highlight potential changes in future economic
conditions that would warrant a change in asset allocation.
Do
not, at this stage, move from asset allocation to securities selection. You may
recommend that 30% of the fund be invested in equities, but you should leave
until later the specific equities that will be chosen.
Step 4: Choose an investment strategy
and benchmarks (3-6 A4 pages)
Decide
whether the investment strategy will be more passive or more active in nature.
Why have you made this choice? What are the costs and benefits of the
alternative strategies? How does this relate to the risk that the client is
prepared to take? How frequently will you assess the performance of the
portfolio? What will make you consider changing the composition of the
portfolio? What are the conditions or circumstances that will make you advise
taking some action? Choose benchmarks to analyse the relative performance of
the assets and securities that you have chosen. Outline the characteristics of
a useful benchmark. Explain why you have chosen these benchmarks over
alternatives.
Target length:2,000 words
This
assignment is not graded, but you will receive feedback from your Instructor to
help you improve your work. Please take advantage of this opportunity to learn
from your Instructor's
feedback
-- give the assignment your full effort and ask for clarification on any
feedback you do not understand.
To
submit your Module Project to Turnitin, click on the "View/Complete"
link for Week 5 Module Project -- FF - Turnitin.
Week 6 Collaboration
Collaboration: Business
valuation: Part 1
Review
this week’s Learning Resources with a focus on business valuation. Reflect on
the perspective of a company manager intending to conduct a hostile takeover of
another company. Identify potential methods of valuating the merger target.
Consider the strengths and weaknesses of your identified methods.
For
this Collaboration, you will further explore concepts of business valuation as
you valuate a merger acquisition
Recall
that most investors will evaluate investment or business opportunities by
comparing the cost and risk of an acquisition versus the expected future
return. For example, recall the life cycle of firms and their dividend
policies. Young firms usually have much greater growth potential than larger,
more-established companies. However, due to a lack of reputation or tangible
assets, it is likely to be more difficult or expensive for these newly established
companies to borrow. In this case, there would be a tendency to pay few or no
dividends. Conversely, larger firms are more likely to be in a business that is
more mature. They may find it easier to borrow if necessary, and therefore they
would tend to return more of their earnings to shareholders.
Bearing
these examples in mind, for this Collaboration, you will further explore these
concepts of business valuation as you valuate a merger acquisition. You will do
so under the guise of a manager of a company that intends to conduct a hostile
takeover.
To complete this
Collaboration:
For
your Initial Response, in approximately
750–1,000 words, address the following issues/questions:
As
the manager of a company that intends to conduct a hostile takeover, outline
your strategy on how you would evaluate a merger target.
Explain
the key variables you would need to address in executing your strategy.
Critically
analyse the main strengths and weaknesses of your chosen methodology and
justify the reasoning for your choice.
Submit
your Initial Response to Turnitin and to the Collaboration forum.
Until Wednesday (Day 7):
Offering
contributions based upon your prior experience
Extending
the discussion into new but relevant areas
Modelling
or promoting critical reflection from what you have read
Participate
by engaging in a discussion with your colleagues, replying to each other’s
posts by:
You
should aim to participate with follow-on postings to your colleagues’
responses, making 3–5 significant follow-up postings. Aim to spread your total
collaboration discussions across 3 separate days of each week.
Your
collaborative participation will be assessed in three segments. Following the
completion of Week 3, you will receive summative feedback and an initial grade
based upon your participation in Weeks 1–3. At the end of the Week 5, you will
receive additional summative feedback and a second grade based upon your
participation in Weeks 4 and 5. At the end of the module, you will receive
further summative feedback and a third grade based upon your participation in
Weeks 6–8. These three assessment points will each form 5% of your End of
Module grade, with a total of 15% for your participation posts overall.
Click
on the Reply button below to reveal the textbox for entering your message. Then
click on the Submit button to post your message.
Personal Development Plan
This
week you will create a further submission of a reflective statement relating to
your module work to date.
This
activity is designed to help you reflect in more depth on your personal
development and should feed in to your (graded) Final PDP submission for Week
8.
To complete this PDP:
Post
a draft version of your PDP submission to your My Working Group, to obtain
feedback and suggestions from your team members. You should do this as soon as
possible after the start of Week 6. Note, you should use the main My
Working Group forum and the pre-prepared PDP Formative Assessment
Discussion Week 6 thread.
By Wednesday (Day 7):
Submit
an approximately 1,000-word post
describing areas of your ongoing personal development related to this module.
·
Build upon the
material from your Week 4 reflective paper. Please reflect upon the questions
and feedback from your Week 4 PDP. You may wish to reflect upon the following:
·
Discuss those areas
of investment strategies that have most resonated with you so far.
·
How do you see the
concepts that you have studied applying to your professional experience, as
well as your personal finances?
·
What steps might you
now take to aid you in the transition of applying the coursework to your
workplace?
Submit
your post to the Turnitin link provided.
Week 7 Collaboration
Collaboration: Business valuation:
Part 2
Review
this week’s Learning Resources with a focus on derivative valuation. Review the
Week 6 Collaboration as necessary. Reflect on the given statement from Warren
Buffet and review the given Reference. Identify benefits and risks associated
with the use of derivatives. Reflect on scenarios where derivatives are useful
or damaging to merger acquisitions.
Until Wednesday (Day 7):
Continue
to participate by engaging in a discussion with your colleagues replying to
each
“Derivatives
are time bombs, both for the parties that deal in them and the economic system.
Basically these instruments call for money to change hands at some future date,
with the amount to be determined by one or more reference items, such as
interest rates, stock prices, or currency values. For example, if you are
either long or short an S&P 500 futures contract, you are a party to a very
simple derivatives transaction, with your gain or loss derived from movements
in the index. Derivatives contracts are of varying duration, running sometimes
to 20 or more years, and their value is often tied to several variables.”
—Warren Buffet (2002)
Take
a moment to consider this statement from Buffet. In the past, the investor has
oft referred to derivatives as ‘weapons of financial mass destruction’.
However, despite their inherent risk, derivatives do have their benefits and
can be helpful in merger acquisitions.
As
such, this week’s Collaboration will continue the discussions on valuating a
merger acquisition as you consider this week’s topic of derivative valuation.
Reference:
Buffet, W. (2002) Berkshire Hathaway annual report [Online]. Available from:
http://www.fintools.com/docs/Warren%20Buffet%20on%20Derivatives.pdf (Accessed:
11 March 2015).
To complete this Collaboration:
In Week 7, you are not required to submit an
Initial Collaboration post. You will, however, find that your Instructor has
posted some initial questions in the Discussion Board Week 7 Collaboration
Thread to help stimulate your subsequent debates.
Week 7 Module Project:
Final submission
In
the previous submissions of your Module Project, you broke down the details of
your prospective client, focusing especially on his or her resources,
liabilities, location, and interests. Based on this information, you created benchmarks
and devised a viable investment strategy for the client. You also developed a
clear list of the client’s financial needs and assets.
Using
this information, this week, you will develop a full investment strategy for
your client. To do so, you will evaluate various strategies and ultimately
present a report aimed at convincing a client to allow you to invest on his or
her behalf.
To complete this Module
Project:
By Wednesday (Day 7):
This
week, you submit your completed Module Project which should be around 5,000
words.
You
will finalise Steps 1-4 and also complete the following two milestones (Steps
5–6) of the Module Project:
Steps 1-4
·
From Week 3 and Week
5 submissions, final version with Instructor feedback incorporated.
Step 5: Pick specific securities (three
to six A4 pages)
·
Select the specific
securities (bonds, equities or other) that you will recommend the client
purchase with his or her funds.
·
Can you purchase
specific bonds that mature at the time that funds are required? Explain to the
client what this does to the risk of the portfolio.
·
Outline the criteria
that you have used to select the securities. This should include an assessment
of things such as the P/E ratio, the shape of the yield curve and current price
of risk in the markets.
·
The securities
selection should be consistent with the asset allocation decided in Step 3. Any
changes in the asset allocation that have been considered should lead to some
change in the composition of the securities held. If you have outlined some
potential for changes in the asset allocation,
·
You may want to also
recommend changes in specific securities that would accompany these
adjustments. You may want to look at funds. Which funds will you choose? How
will you make the selection? What are the costs that you will have to pay to
invest in these funds? What are the costs and benefits of using funds rather
than your own judgment?
Step 6: Finalise your document and
write an executive summary (around 5,000 words overall; 20–30 A4 pages for the
main body of the report)
·
Make amendments to
the overall document. Now is the time to finalise the selection of particular
bonds and equities for the portfolio.
·
Try to ensure that all
the components are consistent.
·
The format should be
professional, both in prose and in visual format.
·
When you refer to an
article or book, use the Harvard Liverpool Referencing System. Please remember
to include apposite citations from peer-reviewed journal articles (from our
online library).
·
Extract your most
important elements for your executive summary and remember to include an Index
and end References list.
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