Subject Code : BUACC3721
Country : Australia
Assignment Task:

You are a managing director of a prestigious investment advisory firm that specializes in individual account rather than institutional accounts. The firm has developed a national reputation for its ability to blend modern portfolio theory and traditional portfolio methods. Your company provides investment advices and wealth management services for individual clients, tailored to their particular circumstances and needs. The clients pay advisory commission fee to your company in return for the provision of initial investment planning and ongoing investment advices and management of investment portfolios on their behalf. 

Professor Dignity has been referred to your firm and to you in particular. At your first meeting on Prof. Dignity explained that he is a medical practitioner and long- time professor at the Pharmaceuticals Institute. He is also an inventor, and, after 30 years of teaching, the rights to one of his patented inventions, the “3D printed drugs,” have just been acquired by a new Pharmaceutical company, Glaxin, Inc. 

The management of Glaxin has indicated to Prof. Dignity that he might expect royalties of as much as $1,000,000 in the first year of production and maximum royalties of as much as $100,000 annually thereafter. 

During your counselling meeting, Prof. Dignity expressed concern for the proper investment of the $1,000,000 initial payment. He pointed out that he has invested all of his savings in his inventions. Thus, he will have only his Social Security retirement benefits and a small pension from the Pharmaceutical Institute to provide for his retirement. Prof Dignity will be 65 in 2021. Prof Dignity is interested in helping with the education of his six grandchildren and in providing an annual scholarship to a young researcher who is attending the Pharmaceutical Institute. 

In your discussions with Prof. Dignity, you found that he is interested in investing his $1,000, 000 in Australian Stock Market and indicated that he is a one with high-risk tolerance who would like to have an investment strategy and associated portfolio to be focused on a capital growth perspective rather than an income or tax-effectiveness perspective. 

As the most senior executive in your firm, you have asked the staff in your team to analyse the overall market and pick up a potential stock, which is desired to fit the client’s expectation. 

To facilitate your search and to be consistent, you advised that each of the team members have to select a potential stock from either the ASX200 Index, ASX300 Index or All Ordinaries Index. 

Required: 

You are required to prepare a comprehensive business report to be presented in the coming team meeting and provided to the client. The report should focus on an appropriate investment strategy discussed in terms of return on investment, liquidity and time horizon, risk tolerance and tax considerations. The report may include some/all of the following information: 

• Your perspectives on the current investment environment in Australia identifying any key economic or financial indicators or events affecting the investment environment in near future. 

• Technical and/or fundamental analysis to analyse the share of the potential company’s stock among other companies in the same sector that you would like to recommend for the client’s investment portfolio. 

• Justification of your recommendation by selecting at least one comparable company in the same industry and analysing the shares of the companies you have chosen for contrasting. Indicate which company is fundamentally stronger and holds more promise for the future capital growth. 

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  • Posted on : May 06th, 2019
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