Tutorial 2 Solutions

1. How to compare different assets in investment selection process? 2. What are the quantitative characteristics of the assets and how to measure them? 3. How does one asset in the same portfolio influence the other one in the same portfolio? 4. And what could be the influence of this relationship to the investor’s portfolio? 5. What is relationship between the returns on an asset and returns in the whole market (market portfolio)?

Which of the following are the key factors when determining asset allocation for an investment? I. Time an investor has until he needs to use the money from the investment (time horizon) II. Risk preferences (tolerance for risk) III. Current financial situation   a. I., II., & III.   b. I. & III.    c. II. & III.   d. I. & II.

Can you help me with this please? explanation of the characteristics of investment appraisal decisions and theadvantages and disadvantages of the IRR.

Which of the following statements is true regarding the sensitivity analysis approach to investment appraisal? a. It involves changing many factors at the same time b. It provides an indication of the likelihood of changes in the key factors c. It provides managers with clear guidance concerning the investment decision d. It is commonly called ‘how-now’ analysis e. Noneoftheabovearetrue

The following are investment criteria: net present value, payback, profitability index, average accounting return, and the internal rate of return. Question: Which one of these is the most valuable from a financial point of view, and why? (Answer the question correctly and in-depth.)

Prepare a detailed analytical report that encompasses the following areas. Nature of investment markets, the Primary and secondary investment markets. Also brief discussion on the money market and capital market providing key differences between the two. Five stages of the investment management process providing key points that will ensure the success of the investment decision.

Explain why risk and uncertainty should be considered in the investment appraisal process.

Which approach to investment analysis is "best" in terms of accounting for both the timing and amount of revenue streams from a potential investment? A.  the payback period B.  the simple rate of return C.   the net present value D. the internal rate of return

While comparing investment returns is an important starting point in evaluating investment performance, it represents which part of the analysis?

What text and supplemental information, is there a best choice for using any one specific method of investment valuation, or do you have more than one?

Which of the following tools is sometimes used to rank investment proposals? 01. 02. 03. 04. 05. Project assessment guide (PAG). Investment opportunity index. Annuity index. Profitability index. Capital ranking index.

Which of the following best explains the role of diversification as part of an investment strategy?   a.Choosing investment vehicles with varying levels of risk/reward   b.Spreading investments out over time   c.Balancing investment amounts with debt amounts   d.Soliciting the opinions of multiple financial planners

Your client is evaluating the upside and downside of a potential investment. What stage of the Financial Planning process is this? O Routine Allocation O Indemnification O Assessment