Investment Financial Analysis Essay Example

Investment Financial Analysis 8

TABLE OF CONTENTS

1.1: Abstract———————————————————————————————-3

1.2: Introduction ——————————————————————————————3

1.2.1 Stocks——————————————————————————-3

1.2.2 Government Bonds—————————————————————-3

1.2.3 Investing on stocks and bonds—————————————————-3

2.1: Investment Banks———————————————————————————-4

2.1.2: Officers Superannuation Fund———————————————— 5

2.1.3 Barclays Bank earnings ——————————————————— 5

Recommendation ————————————————————————————— 6

Conclusion ———————————————————————————————- 6

Graphs ————————————————————————————————— 7

References———————————————————————————————— 8

1.1 Abstract

The purpose of this study is to propose a suitable investment portfolio for any client willing to take a risk and face the bull by its horns. All investors are described as risk takers because nobody knows what the future holds when investing. This is because the value and rate of buying and selling stock can change from bullish to bearish and vice versa regardless of the coupon rate.

1.2 Introduction

There have been a lot of myths, discussion and arguments regarding the best way an individual may invest money for maximum returns. Investment is required to provide maximum returns in the long run though it all depends on the banker or investor that handles once money.

1.2.1 Stocks

A shareowned by a Company is referred to as stock. The promoters of a Company usually sell them to gain additional funds for the development and expansion of a Company. Thus the owners no longer have control of their Company. In essence the stocks are free to be traded on the stock market. Depending on the management performance the value of the stock may rise or decline.

1.2.2 Government Bonds

A bond is a debt owed by the Government for an investor who is the lender. An investor lends the Government money for a specified period of time at a guaranteed rate of return. Tactically at maturity the lender gets back the face value of the money plus the coupon payments.

1.2.3. Investing on Stocks and Bonds

Both stocks and bonds have advantages and disadvantages and investment depends solely on whether one is a risk taker or risk averse. The stocks are recommended for high risk takers and bonds for risk averse though stocks have got no guaranteed return. Diversification of an individual portfolio is the most recommended way of investing. This ensures that all eggs are not put in one basket as a safety precaution.

2.1 Investment Banks

Australia has got a variety of investment banks such as Reserve Bank of Australia (RBA), Deutsche Bank, JP Morgan, Barclays and many others. The Reserve Bank of Australia seems to be up to date with current harsh economic times. The bank performance has been outstanding regardless of the harsh financial crisis to the extent of raising the Governor Glenn payout (Bloomberg L.P 2011). According to their annual report, the assets and liabilities are at par ranging 80 – 100 $Billion in 2010. Their domestic securities have also continued to decline from 2008 from 60 – 40 $ Billion (RBA Annual Report, 2010). However their trading of cash platform in domestic market operations has continued to escalate over the past year retaining a high level of exchange rate which is beneficial for investors and shareholders.

Dec 2010 to €28,916 billion compared to €43,509 billion in 2009 ( Deutsche Bank AG 2011). There is also a tremendous increase in common shares traded in treasury from €48 billion in 2009 to €450 billion in 2010. Some of the top performing banks carry out large transactions on stocks in terms of their market capitalization. stWe do not however over rule the other banks but considering the potential of having continuous cash flow for trading in the bank when the economy is facing glaring economic hardships and other external factors such as the tsunami and China’s earthquake, it is wise to invest in different banks. The Deutsche Bank annual report shows reduced securities that were borrowed as at 31

In February 2009, the top 12 U.S. banks net assets value and shares had performed better than expected . There still exist some quack banks within posing high risks to investors, who should be warned in advance. Inflation is also a giant that depicts fluctuation of the value of shares and therefore to be guaranteed the rate of return Government Bonds have better security.

The merger of Australia Stock Exchange in 2006 has paved way for constant innovation and improved stock exchange through electronic media for vast growing economic markets (Markets Wiki, 2011).

2.1.2 Officers Superannuation Fund (OSF)

Column Graph 2.1.2 below clearly stipulates that the Reverse Bank of Australia investment on domestic shares has an outstanding improvement( RBA Annual report, 2010).

2.1.3 Barclays Bank Earnings

Banks are highly potential areas to invest wisely when it comes to stocks because they have numerous branches worldwide and their investments are handled by financial experts. Barclays Bank is one of the top ten investment banks with viable returns. The annual report on graph 2.1.3 shows an increase of more than 50% ratio earnings (Barclays Bank Annual report, 2010).

Recommendation

It is glaring from the above graph and analysed discussion that the portfolio manager has the option of investing $300 million on government bonds with Reverse Bank of Australia and $200 million on banking stocks with Barclays Bank to diversify the portfolio and minimize loss exclusively.

Conclusion

Investement of stocks or bonds requires analysis and predicting the unknown, therefore errors in the analyis should be no excuse since this may result to mass losses. But for higher returns in this harsh economic financial crisis period, investment for longterm maturity is the better option than gambling with stocks whose return is likely to alter due to inflation.

2.1.2 Officers Superannuation Fund Graph

Professor:

2.1.3 Barclays Bank Earnings Graph

Professor: 1

References

Barclays Bank (2010) Annual Report 2010 Retrieved on 25th April 2011 from .com/ar2010/indexbarclaysannualreportwww..

Bloomberg L.P.(2011)Retrieved on 26th April 2011 from -s-stevens-received-a-234- 000-pay-increase-at-height-of-global-crisis.htmlrbawww.bloomberg.com/…/

Deutsche Bank (2009) annual report 2009 Retrieved on 26th April 2011 from annualreport.deutschebank.com/2009/ar/…/downloads.html

Kimberly A (2011) What Are the Benefits of Stock Investing for the Individual Investor? Retrieved on 26th April 2011 from http://useconomy.about.com/od/stocksandstockinvesting/f/Stocks_Benefits.htm

Investopedia (2011) What are the advantages and disadvantages of buying stocks instead of bonds? Retrieved on 26th April 2011from http://www.investopedia.com/ask/answers/124.asp

Reserve Bank of Australia (2010), Annual report 2010 Retrieved on 26th April from http://www.rba.gov.au/publications/annual-reports/rba/2010/html/ops-fin-mkts.html

Market Oracle (2011) Daily Financial Market Analysis 2011 retrieved on 26th April 2011 from http://www.marketoracle.co.uk/

Markets Wiki (2011) retrieved on 26th April 2011 from http://www.marketswiki.com/mwiki/Australian_Securities_Exchange