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Finance & Accounting
Pages 8 (2008 words)
Share Trading Assignment Table of Contents Introduction 4 Construction of Portfolio 4 Portfolio Evaluation 5 Fundamental Analysis 5 Economic Analysis 6 Industry Analysis 7 Stock Markets Analysis 8 Technical Analysis 8 Results 10 Conclusion 13 References 14 Bibliography 16 Appendix – A 17 Table B.1 – List of Companies in Portfolio I (Fundamental Analysis) 17 Table B.2 – List of Companies in Portfolio II (Technical Analysis) 17 Table B.3 – Risk-Return Analysis for Portfolio I 18 Table B.4 – Risk-Return Analysis for Portfolio II 18 Table B.5 – Portfolio Construction and Performance Evaluation for Fundamental Analysis 19 Table B.6 – Portfolio Construction and Performance Evaluation
Diversification of investment spreads the risk over many assets. The concept of Efficient Market Hypothesis (EMH) states that since the stock prices reflect all relevant information in the market, it is not possible for the investor to beat the market by purchasing selling stocks at inflated prices or purchasing undervalued stocks. Thus, in order to beat the market the investor will have to be well informed regarding the true fundamentals of the stocks and carefully follow historical trends. Technical analysis helps and investor to predict future movement of stock prices by analysing past trends whereas fundamental analysis considers a top-down approach that analyses not only the fundamental financial position of firms but also macro-economic and industry trends. The objective of this assignment is to invest ?100,000 in UK stock market shares that are listed on FTSE ALL Share index. There will be two portfolios of shares where one will be evaluated by technical analysis and the other by fundamental analysis. ...
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