Your Aunty Stottie has some savings which she wants to invest in shares.
She has asked for your advice because she knows you are doing a financial management unit
in your university degree. Aunty thinks you are brilliant.
She wants to invest all her savings in shares of the company on which you have surveyed and
done some research (use any listed company on Australian Stock Exchange (ASX) – selected
share’s name to be furnished to lecturer prior to the commencement of assignment)
Your Aunty is ignorant on what and how to invest. You also know that investing in only one
asset can be risky. You will need to explain this to Aunty. Your explanation to her should cover:
–
1. Possible macro-economic(country) and industry factors and risks of your (share)
selection (2 marks)
2. Firm specific factors and risks that may be associated with the performance of your
(share) selection (2 mark)
3. Indicate the historical and the expected return of your selection (try to distinguish
between capital and yield or dividends components, if any) (2 marks)
4. What is the past trend (3, 5 or 10 years) of your selection? (1 mark)
5. Is your selection volatile over the period? Indicate the high-low price variation for the
selection over the period (2 marks)
6. Explain the concept of diversification to Aunty.
[In doing so, you should also explain using examples and refer to relevant charts or
graphs to illustrate your point. Quote your sources of reference. You can use recent
news releases about the company from Internet.] (2 marks)