Investment Portfolio – NBC Institute

FM – Nov 2021 – L3 – Q6 – Portfolio Management

Analyze the risk profile of Bettaluck plc's short-term equity portfolio and assess investment adjustments based on market returns and financial strategy.

Question

Bettaluck plc is experiencing a substantial net cash inflow, which has been temporarily invested in a short-term equity portfolio. This portfolio consists of investments in four Nigerian listed companies. The funds are intended to meet tax obligations, dividend payments, and future capital expenditures in several months.

Portfolio Details:

Required:

a. Based on the data provided, calculate the risk (i.e., Beta) of Bettaluck’s short-term investment portfolio relative to the market. (4 Marks)

b. Recommend whether the composition of Bettaluck’s short-term investment portfolio should be adjusted. Provide reasons for your recommendation, including relevant calculations. (6 Marks)

c. Discuss the factors a financial manager should consider when investing in marketable securities. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Gains, Dividend Yield, Financial management, Investment Portfolio, Market Return, Marketable Securities, Portfolio Beta, Risk Assessment, Short-Term Strategy, Treasury bills
Level: Level 3

Topic: Portfolio Management

AFM – May 2016 – L3 – Q1a – Discounted cash flow techniques, Sources of finance and cost of capital

Calculate the average rate of return for two stocks and analyze portfolio return using different methods.

Question

a) Crown Limited has a mixture of investment portfolios, stock A and Stock B. The historical performance return on the stocks are as follows:

Year	Stock A Return (%)	Stock B Return (%)
2010	-10	-3
2011	18	21
2012	39	44
2013	14	4
2014	33	28

Required:
i) Calculate the average rate of return for each stock during the period of 2010 to 2014. (3 marks)
ii) Calculate the average return on the portfolio during the period if Crown Limited held 50% each of stock A and stock B. (3 marks)
iii) Calculate the return of the portfolio using the standard deviation approach. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Average Returns, Investment Portfolio, Portfolio Management, Standard Deviation, Stock Returns
Level: Level 3

Topic: Discounted cash flow techniques, Sources of finance and cost of capital
Series: MAY 2016

CR – Nov 2018 – L3 – Q2c – IFRS 13 Fair value measurement

Advise Gonja Ltd on the fair value measurement of its real estate-linked investment portfolio in the financial statements for 31 July 2018.

Question

Gonja Ltd is an investment company that holds a portfolio of securities linked to the real-estate market in Ghana. The following information is available at 31 July 2018 regarding this portfolio:

The portfolio cost GH¢13 million 2 years ago.
Real-estate prices in Ghana are generally accepted to have dropped by 20-30% in the past 2 years.
The portfolio of securities held by Gonja is difficult to value, as there is no active market. However, the company has received an offer of GH¢2.6 million for this portfolio from an investor. It has no intention of accepting this offer, although similar companies have accepted offers from this investor due to financial difficulties.
A normal sale in the present climate could be reasonably expected to yield GH¢6 million, based on an analysis of transactions in similar assets.
Gonja’s valuation models suggest that the real estate market in Ghana will recover, and it expects that the portfolio will generate GH¢12 million (at present value) over the next three years.

Required:
In accordance with IFRS 13: Fair Value Measurement, advise Gonja Ltd on the amount it should state its investment portfolio in its financial statements to 31 July 2018, assuming it wishes to use fair value as measured.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fair Value, IFRS 13, Investment Portfolio, Level 2 Inputs, Level 3 Inputs, Valuation Techniques
Level: Level 3

Topic: IFRS 13 Fair value measurement
Series: NOV 2018

FM – Nov 2021 – L3 – Q6 – Portfolio Management

Analyze the risk profile of Bettaluck plc's short-term equity portfolio and assess investment adjustments based on market returns and financial strategy.

Question

Portfolio Details:

Required:

a. Based on the data provided, calculate the risk (i.e., Beta) of Bettaluck’s short-term investment portfolio relative to the market. (4 Marks)

b. Recommend whether the composition of Bettaluck’s short-term investment portfolio should be adjusted. Provide reasons for your recommendation, including relevant calculations. (6 Marks)

c. Discuss the factors a financial manager should consider when investing in marketable securities. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Gains, Dividend Yield, Financial management, Investment Portfolio, Market Return, Marketable Securities, Portfolio Beta, Risk Assessment, Short-Term Strategy, Treasury bills
Level: Level 3

Topic: Portfolio Management

AFM – May 2016 – L3 – Q1a – Discounted cash flow techniques, Sources of finance and cost of capital

Calculate the average rate of return for two stocks and analyze portfolio return using different methods.

Question

a) Crown Limited has a mixture of investment portfolios, stock A and Stock B. The historical performance return on the stocks are as follows:

Year	Stock A Return (%)	Stock B Return (%)
2010	-10	-3
2011	18	21
2012	39	44
2013	14	4
2014	33	28

Answer

Find Related Questions by Tags, levels, etc.

Tags: Average Returns, Investment Portfolio, Portfolio Management, Standard Deviation, Stock Returns
Level: Level 3

Topic: Discounted cash flow techniques, Sources of finance and cost of capital
Series: MAY 2016

CR – Nov 2018 – L3 – Q2c – IFRS 13 Fair value measurement

Advise Gonja Ltd on the fair value measurement of its real estate-linked investment portfolio in the financial statements for 31 July 2018.

Question

Gonja Ltd is an investment company that holds a portfolio of securities linked to the real-estate market in Ghana. The following information is available at 31 July 2018 regarding this portfolio:

The portfolio cost GH¢13 million 2 years ago.
Real-estate prices in Ghana are generally accepted to have dropped by 20-30% in the past 2 years.
The portfolio of securities held by Gonja is difficult to value, as there is no active market. However, the company has received an offer of GH¢2.6 million for this portfolio from an investor. It has no intention of accepting this offer, although similar companies have accepted offers from this investor due to financial difficulties.
A normal sale in the present climate could be reasonably expected to yield GH¢6 million, based on an analysis of transactions in similar assets.
Gonja’s valuation models suggest that the real estate market in Ghana will recover, and it expects that the portfolio will generate GH¢12 million (at present value) over the next three years.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fair Value, IFRS 13, Investment Portfolio, Level 2 Inputs, Level 3 Inputs, Valuation Techniques
Level: Level 3

Topic: IFRS 13 Fair value measurement
Series: NOV 2018

Question Tag: Investment Portfolio

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FM – Nov 2021 – L3 – Q6 – Portfolio Management

Analyze the risk profile of Bettaluck plc's short-term equity portfolio and assess investment adjustments based on market returns and financial strategy.

Required:

AFM – May 2016 – L3 – Q1a – Discounted cash flow techniques, Sources of finance and cost of capital

Calculate the average rate of return for two stocks and analyze portfolio return using different methods.

CR – Nov 2018 – L3 – Q2c – IFRS 13 Fair value measurement

Advise Gonja Ltd on the fair value measurement of its real estate-linked investment portfolio in the financial statements for 31 July 2018.

FM – Nov 2021 – L3 – Q6 – Portfolio Management

Analyze the risk profile of Bettaluck plc's short-term equity portfolio and assess investment adjustments based on market returns and financial strategy.

Required:

AFM – May 2016 – L3 – Q1a – Discounted cash flow techniques, Sources of finance and cost of capital

Calculate the average rate of return for two stocks and analyze portfolio return using different methods.

CR – Nov 2018 – L3 – Q2c – IFRS 13 Fair value measurement

Advise Gonja Ltd on the fair value measurement of its real estate-linked investment portfolio in the financial statements for 31 July 2018.

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FM – Nov 2021 – L3 – Q6 – Portfolio Management

Analyze the risk profile of Bettaluck plc's short-term equity portfolio and assess investment adjustments based on market returns and financial strategy.

Required:

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AFM – May 2016 – L3 – Q1a – Discounted cash flow techniques, Sources of finance and cost of capital

Calculate the average rate of return for two stocks and analyze portfolio return using different methods.

You're reporting an error for "AFM – May 2016 – L3 – Q1a – Discounted cash flow techniques, Sources of finance and cost of capital"

CR – Nov 2018 – L3 – Q2c – IFRS 13 Fair value measurement

Advise Gonja Ltd on the fair value measurement of its real estate-linked investment portfolio in the financial statements for 31 July 2018.

You're reporting an error for "CR – Nov 2018 – L3 – Q2c – IFRS 13 Fair value measurement"

FM – Nov 2021 – L3 – Q6 – Portfolio Management

Analyze the risk profile of Bettaluck plc's short-term equity portfolio and assess investment adjustments based on market returns and financial strategy.

Required:

You're reporting an error for "FM – Nov 2021 – L3 – Q6 – Portfolio Management"

AFM – May 2016 – L3 – Q1a – Discounted cash flow techniques, Sources of finance and cost of capital

Calculate the average rate of return for two stocks and analyze portfolio return using different methods.

You're reporting an error for "AFM – May 2016 – L3 – Q1a – Discounted cash flow techniques, Sources of finance and cost of capital"

CR – Nov 2018 – L3 – Q2c – IFRS 13 Fair value measurement

Advise Gonja Ltd on the fair value measurement of its real estate-linked investment portfolio in the financial statements for 31 July 2018.

You're reporting an error for "CR – Nov 2018 – L3 – Q2c – IFRS 13 Fair value measurement"

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