Investment management

Discuss the efficient market hypothesis and its relevance with the investment management strategies. (10 marks) The Efficient Market Hypothesis (EMH) is an investment theory that states it is impossible to “beat the market” because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. The paradox of efficient markets is that if every investor believed a market was efficient, then the market would not be efficient because there would be…

i. Current Assets are the items on balance sheet of an entity which are in the form of either cash, equal to cash or can be converted to cash within next one year. For example: investments, foreign currency, cash, inventory, receivables and work in process(Kumar, 2014). ii. Noncurrent Assets are the long term investments of an entity which full value cannot be realised within one year of balance sheet date. Examples are: plant, equipments, furniture, vehicles, land, building, brand recognition,…

Share this article on Pinterest Expert Author Randall JP Stewart 1. Process: Commit to an investment philosophy that emphasizes capital preservation, patience, discipline and a rational decision-making process. The best value investors follow a defined process of analysis of value rather than focusing on outcomes. Since business valuation…

position achieving its profit forecast for FY2014 of $40million. Based on a dividend ratio based on 60% to 70% of profit, the company estimated a dividend yield of 4.6 to 5.4%. This still positions the company with reserve funds for future capital investment.⇒ Dick Smith and Quickflix are both in the retail sector, as you can see on the graph here Quickflix and Dick Smith track pretty closely to each other up until March. As you can see Dick Smith’s profitability is much greater than…

influences from financing, investment and dividend policies. Projects cost of capital rate of return indicate the riskiness of a project involved where “The firms cost of capital is the overall or average required rate of return on the aggregate of investment projects.” Cost of Capital is a useful method used…

effective decision making by utilizing all of their financial ownership. Some theorists, such as Lusardi and Mitchell (2007) claim that financial literacy is an element that is associated with individual achievement in better planning; for illustration, investment for retirement and savings…

should it outperform (upside case) or underperform (downside case) the original valuation of the business. Taking these three values into account, shares are assigned a valuation range. • Margin of Safety: There is no escaping the reality of a poor investment, but purchasing shares where they would the implied upside is no lower than 15% for large cap names and 20% for anything smaller. • Re-evaluation: I’ve learned on a number of occasions that it is important to look at risk, when it presents…

of this unforeseen catastrophe Robert Citron. Irrefutably, the financial complications that lead to the bankruptcy were the direct result of the mismanagement of public funds by county treasurer, Robert Citron. Furthermore, due to Citron risky investments with the county’s monies, he left the county in a one-and—half billion dollars’ worth of debt. According to the text, as a result, “…Citron was forced to resign in disgrace, and his foresight opponent was appointed to fill the vacant office and…

value. A common misconception is that the market provides the most accurate price. Buffett maintains the same buying principles whether it is a public or private company. In making a purchase, three things are considered: 1. Economic prospects 2. Management 3. Asking price. An actively traded business provides a good flow to evaluate. Buffett continues about Graham’s principles and discusses the market as an individual: Mr. Market. Mr. Market has emotional problems, some days are good and…

financial/operational performance, knowledge transfer and capability development. Objective measures may include ROA, longevity, survival and stability of JV in addition to profitability. Any of the objective measures should be stated in the contract. • Knowledge Management is dependent on partner’s motivation to learn, parent’s willingness to share. While…