Securities Analysis and Portfolio Management Essay

Securities Analysis and Portfolio Management - Essay Example Louis is no longer working as a stock broker and Simon is now using the services of Cheryl who has strong views about Simon’s portfolio. Cheryl, a graduate in finance from York University, believes that markets are essentially efficient and admires the work of Harry Markowitz and Fama and French. She believes that the important thing is to have a good portfolio rather than good individual investments. Cheryl tells Simon that she doesn’t feel that he even has the best companies now even if they had been when the portfolio had been set up. Cheryl goes on to say that that a good portfolio needs to include exposure to overseas companies and smaller companies thus reducing the â€Å"beta† and improving the â€Å"alpha† of the portfolio. Cheryl also argued that it is vital to watch the â€Å"momentum† and have stop-losses on all the holdings in order to protect against primary downside movements. Simon is very concerned about his share holdings after talk ing to Cheryl and has approached you for advice. You ascertain that Simon, who doesn’t work, is 65 years old and is receiving a more than adequate income from his existing portfolio. Simon rents a flat in a seaside resort and does not wish to buy property. Simon is not willing to take on any additional risk. In addition to the shares discussed above Simon has ?14,000 in a bank account and ?300,000 in medium dated conventional gilts. Simon has two children from his short lived marriage to Susan who both have well paid jobs. Simon does not wish to transfer assets to his children as he would prefer to support any future grandchildren he has through their education. Simon’s ten equity holdings are: Company PE Ratio Dividend Yield Dividend Cover Equity Market Capitalisation (?m) BAE Systems 7.9 4.96% 2.5 11,003 BP 7.2 8.84% 1.6 77,353 British American Tobacco 15.4 4.2% 1.5 47,264 BT Group 7.6 4.89% 2.7 10,956 Diageo 14.8 3.47% 1.9 66,234 GlaxoSmithKline 10.5 4.78% 2.0 66,23 4 HSBC 29.9 3.34% 1.0 116,479 Marks and Spencer 10.9 4.16% 2.2 5,705 Rolls Royce 14.7 2.56% 2.6 10,847 Unilever 16.1 2.31% 3.2 23,281 Required: (a) With relevant statistics, discuss the strengths and weaknesses of Simon’s existing portfolio above (make reference to eps/dps growth; betas; price performance; and sector spread of the ten shareholdings). (35 marks) Simon’s stock portfolio has been constructed according to the established views of modern portfolio theory, which seeks â€Å"alpha† by selecting stock holdings in companies that will outperform the return of the general stock indices or interest rates over time. Modern portfolio theory is based in the tenets of risk management, which analyze security investments according to â€Å"beta† or the volatility of stock pricing due to company specific business activities, market factors, macroeconomic changes, natural disasters, wars, etc. Investors have different expectations, personal, and professional motivations in building their investments and with this also comes varying appetites or tolerances for risk. Modern portfolio theory was developed largely before ETF vehicles existed to track index performance through large, distributed

Supply Chain Integration Essay Example | Topics and Well Written Essays - 3750 words

Supply Chain Integration - Essay Example The study "Supply Chain Integration" will help to understand than the coordination of information for the common benefit of businesses in the supply chain is more effectively accomplished via the internet. The internet in supply chain integration is important for the sharing of information relative to supply and demand in a more timely manner and as such signifies the significance that information and knowledge have in the creation of â€Å"value†. It is useful for efficiently facilitating the means for adopting â€Å"an integrated approach throughout the supply chain† and allows for the more effective balancing of â€Å"autonomy and control† among the individual supply chain partners. GE’s online business network is indicative of the significance of using the internet for integrating supply chain management. GE’s online trading process is a significant improvement on the prior process which involves prolonged â€Å"labor intensive contract biding and award processes†. By using the internet, businesses are able to reach out to new markets by providing reduced costs for entrants, less â€Å"complexity with more flexibility† and more importantly offer a far more efficient method for doing business. Another development in international business behavior necessitating integrating the supply chain via the internet and via tB2B is the tendency to outsource and the formation of tactical partnerships among industries. The internet provides a forum by which supply chain integration is accomplished at minimal cost with optimal success.... The internet in supply chain integration is important for the sharing of information relative to supply and demand in a more timely manner and as such signifies the significance that information and knowledge has in the creation of â€Å"value† (Graham & Hardaker, 2000, p. 287). Graham and Hardaker (2000) maintain that the internet is useful for efficiently facilitating the means for adopting â€Å"an integrated approach throughout the supply chain† and allows for the more effective balancing of â€Å"autonomy and control† among the individual supply chain partners (p. 287). GE’s online business network is indicative of the significance of using the internet for integrating supply chain management (Graham & Hardaker, 2000). GE maintains an online trading process network which facilitates the transaction of approximately US$1 billion in business among over 1,400 suppliers located around the world. GE’s online trading process is a significant improvem ent on the prior process which involves prolonged â€Å"labour intensive contract biding and award processes† (Graham & Hardaker, 2000, p. 287). By using the internet, businesses are able to reach out to new markets by providing reduced costs for entrants, less â€Å"complexity with more flexibility† and more importantly offer a far more efficient method for doing business (Graham & Hardaker, 2000, p. 287). Another development in international business behaviour necessitating integrating the supply chain via the internet and via tB2B is the tendency to outsource and the formation of tactical partnerships among industries. These kinds of developments obviate the need for information and