AAF040-6 Financial Markets and Portfolio Management

Completing Your Tutoring

What am I required to do in this Tutoring?

You are assumed to be a portfolio analyst at a wealth management company based in Milton Keynes, and required to write to a group of investors considering buying shares in a London stock exchange company of your choice from FTSE Small Cap Constituents. The investors would like to assess the listed company’s performance over the past 5 years compared to the ONE of its main competitors. You are required to prepare an individual report for your chosen company addressing the following areas:

1. Use either Thomson Reuters Eikon or Yahoo Finance to download the last five years of daily time series of historical stock prices and volume data for two UK-listed companies (FTSE Small Caps) from the same sector.

Critically discuss the rationale for your chosen companies and sector.

(20 marks)

2. Provide a graphical representation of historical daily stock prices and returns, and trading volume of the selected stocks. Analyze and explain the key factors behind the major increases and decreases in stock prices with special reference to stock return volatility and liquidity.

(50 marks)

3. Critically discuss why investors should consider liquidity risk (trade volume) of publicly-traded

(10 marks)

4. Critically discuss the comparative use of the price-earnings (P/E) ratio and the price-to-book value (P/BV) ratio in portfolio management.

(20 marks)

TOTAL [100 MARKS]

What do I need to do to pass? (Threshold Expectations from UIF)

In order to pass Assessment 1 you will need to:

• Critically evaluate the literature in the area of financial markets and investment analysis
• Demonstrate a clear understanding of financial markets and investment analysis concepts and theories
• Use real world cases and financial data to demonstrate the ability to analyze securities for consideration in a portfolio.

How do I produce high quality work that merits a good grade?

• Do not write only It should be applied when you are explaining your calculated numbers.
• Use tables to report your calculations and provide headings for each table and refer them in your
• Use charts and graphs where possible as it will add value to your report.
• All the numbers should be reported in 2 decimal Where possible represent your numbers in percentage format; i.e., 19.29%.

How does this Tutoring relate to what we are doing in scheduled sessions?

During the first half of the unit, you will be introduced to topics in financial markets such as stock market, bond market, foreign exchange market etc. For this assessment, you will use your understanding from the discussion on stock market topics to write your assessment. You will also be using skills that you have learned in data collection and analysis.

How will my Tutoring be marked?

Your Tutoring will be marked according to the threshold expectations and the criteria on the following page. You can use them to evaluate your own work and consider your grade before you submit.