Understand different types of securities.
Learning Outcome 1. Understand different types of securities.
Learning Outcome 2. Understand the regulation of security trading and new issues in world markets.
Learning Outcome 3. Be able to apply principles of investment theory, securities and market analysis.
Learning Outcome 4. Understand the principles of taxation.
Learning Outcome 5. Understand the laws and regulations controlling the financial services industry.
Learning Outcome 6. Be able to plan, manage and review client portfolios
Investment Analysis
Section A
Tim & Co is building a new factory in Yorkshire, England. They must pay a final construction payment of 9,000,000 in six months` time.
Foreign exchange and interest rate quotations are as follows:
|
You can trade at the following prices: |
|
|
Spot rate, euro per British pound sterling |
1.4876/ |
|
One year forward exchange rate |
1.4906/ |
|
One - year euro interest rate |
4.10 % |
|
One year pounds` sterling interest rate |
3.55% |
Required:
Prepare a portfolio of evidence that addresses the following questions.
Q1. Is covered interest arbitrage worthwhile? If so, explain the steps and compute the profit based on an initial transaction of 9,000,000. Briefly discuss your findings. (LO 5)
Q2. Identify laws and regulations controlling the financial services industry. (LO 5)
Q3. Assess the principles of direct and indirect taxation and review the implications on a range of business stakeholders. (LO 4)
Q4. Evaluate the key characteristics of different types of securities and assess the strengths and weaknesses of the securities. (LO 1)
Section B
Air UK & Co PLC is an airline service company listed on the London Stock Exchange (LSE) and is based in the UK.
It is a low-cost carrier and has firmly established itself as the UK`s leading low fares scheduled passenger airline.
The primary objective of Air UK & Co is to offer airline services at low fares to generate more passenger traffic, whilst maintaining the focus on cost containment and operating efficiencies.
As the strategies, they developed have stimulated demand, Air UK and Co is now looking to invest in another listed company on the LSE which belongs to the economy / value class airline services and provides passengers with an economy class air travel experience.
For this assignment, you are the finance manager of Air UK and Co and are required to develop the business proposal.