You are the Senior Investment Analyst at Money Doubling Ventures Limited. A client has approached you for Investment advice. He has just inherited a large sum of money from a relative and is looking at investing £1 Million in different classes of assets including equities. To enable you advise your client appropriately, you are to carry out the valuation of one high quality firm listed on any major international stock exchange using relevant excel templates.
• Conduct in-depth background research to enhance the analysis of the chosen listed company. Such research should demonstrate in- depth understanding of the workings of the sector and exchange where it is listed. (20%)
• Conduct comprehensive valuation of the listed firm. Your valuation should use relevant valuation technique(s) to arrive at an appropriately discounted present value (per share) and form the basis of the recommendation to your client. (40%)
• Using relevant sections of the CFA Ethics and Professional Standards and the Global Investment Performance Standards (GIPS), critically analyse any ethical considerations you will make in the course of advising your client. (40%)
Assessment Learning Outcomes :
The purpose is to use relevant Excel templates to provide valuation and advice clients on potential Investments after
considering relevant ethical issues.
1. Demonstrate in-depth knowledge of the contexts in which financial institutions operate, including legal, ethical, and social;
markets; national and international regulatory and rule setting bodies.
2. Demonstrate advanced knowledge of contemporary theories and empirical evidence concerning financial markets and institutions.
3. Critically analyse the role and impacts of global financial market on business environment in supporting business decisions.
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To fulfill the assignment, you need to:
1. Conduct in-depth background research on a high-quality firm listed on any major international stock exchange:
- Start by selecting a company that meets the criteria of being high quality and listed on a major international stock exchange.
- Gather information about the company's background, including its history, business model, products/services, market position, financial performance, and any recent news or developments.
- Research the sector in which the company operates, understanding its dynamics, competitive landscape, key players, and future prospects.
- Study the stock exchange where the company is listed, including its regulatory framework, trading mechanisms, reporting requirements, and any specific rules relevant to the valuation process.
2. Conduct comprehensive valuation of the listed firm:
- Choose relevant valuation techniques to assess the intrinsic value of the company's shares. Common techniques include discounted cash flow (DCF) analysis, comparable company analysis, and precedent transactions analysis.
- Use financial data from the company's financial statements, market data, and industry benchmarks to input into the valuation model.
- Calculate the appropriate discount rate and estimate future cash flows, taking into account growth expectations, risks, and industry trends.
- Apply the chosen valuation technique(s) to arrive at a per share value of the company's stock.
- Use your analysis to form a basis for recommending an investment decision to your client, considering their risk tolerance, investment objectives, and financial situation.
3. Analyze ethical considerations using relevant sections of the CFA Ethics and Professional Standards and the Global Investment Performance Standards (GIPS):
- Identify potential ethical challenges that may arise in providing investment advice to your client, such as conflicts of interest, insider trading, or misrepresentation of information.
- Apply the principles and guidelines outlined in the CFA Ethics and Professional Standards and the GIPS to critically analyze and address these ethical issues.
- Consider the impact of your recommendations on the client's long-term financial well-being and ensure that they align with ethical standards and professional conduct.
Please note that completing this assignment requires a comprehensive understanding of financial markets, valuation techniques, ethical standards, and professional guidelines. Ensure that you allocate sufficient time for research, data analysis, and critical thinking. Additionally, consult academic resources, financial databases, and professional literature to support your analysis and recommendations.
Good luck with your assignment!