Module Title: Financial Markets and Investment
Assignment for Summative Assessment (2019 – 20)
Please note that the maximum word limit is 3000 words.
Assume that you are working as a financial analyst in a financial consulting firm. Your
company mainly offers support to individual investors who invest their money in the
capital market. For simplicity, assume that all the investments are made in financial
assets listed and traded mainly on the LSE (London Stock Exchange). You are
requested to offer specialist investment advice to a client who has a total of
£100,000 cash to invest. As a financial analyst you are required to prepare a report
making suggestions as to the selection of appropriate financial assets to buy with the
£100,000. In preparing your report with detailed suggestions to the client you should
note the following requirements apply:
1. You have to invest a total of £100,000 or any fractional amount as close to
£100,000 as possible (considering the indivisibility of investment in some cases).
2. You have to form a portfolio rather than investing money in one single financial
asset.
3. The minimum number of financial assets that you should include in the portfolio is
five and the maximum is ten financial assets.
4. You have to make an assessment of the risk attitude of your client at the beginning
of your report and set out an appropriate investment strategy to follow.
5. You may include a risk-free security in the portfolio. The proportion of investment
in risk-free assets should be determined by you and based on your assessment of
the risk attitude of your client.
6. You have to include common stocks in the portfolio. However, the proportion of
investment in stock should be determined by you based on your assessment of the
risk attitude of your client.
8. You may assume that short selling is allowed.
9. Your target is to maximise return and minimise risk. However, the combination of
risk and return should be based upon your assessment of the client’s risk attitude.
10. You must write the report in a professional manner.
11. You need to compare the performance of your portfolio with the return of a
selected index (FTSE100 or any other index of your choice) for a period of the past
12 months to justify the selection and construction of your portfolio.
12. You must provide relevant explanations concerning the selection of each asset
and also provide appropriate explanations concerning the construction of the
portfolio. You must show appropriate calculations of asset values and returns of
individual assets and the portfolio, along with risk calculations to justify your decision
in constructing the portfolio and the inclusion of any assets in the portfolio.
13. Any argument you provide in your explanations must be supported by
appropriate literature.
Please note that you should follow an appropriate format for your report. Please see
below for a guide:
1. The report should start with a letter of transmittal.
2. You must provide an executive summary of your report.
3. You must provide an introduction in your report setting out the context and
purpose of your report.