Got a tricky question? Receive an answer from students like you! Try us!

Relative Value Securities - Essay Example

Only on StudentShare
Undergraduate
Essay
Finance & Accounting
Pages 8 (2008 words)

Summary

Introduction This paper will discuss about the potential investment prospect in Carnival Cruise Lines (CCL) and Royal Caribbean (RCL)- two of the major players in the Cruise Industry. Industry is growing and is considered as stable despite the recession. Both these companies are considered as the significant and important players in the industry and with the investment fund of $100 m to be invested, this report will actually provide an analysis of how this investment fund can be split and invested in any or both of these firms…

Extract of sample
Relative Value Securities

2. The persistent economic downturn may remain extended for next 3 quarters. Conclusion & Recommendations The available data and analysis suggests that CCL hold more promise to invest and hence it is recommended that 100% of the amount to be invested into CCL. These recommendations are based upon the assumptions and facts that CCL has been able to reinitiate its quarterly dividends. Since dividends serve as the best signal to the market therefore firm paying the dividend may be preferred over the firm not paying the dividends. Cash flows of CCL are healthy and its ROE is also better than RCL thus making it a more desirable option for investment as compared to RCL. Cruise Industry & Economy Global economy is passing through recession with high levels of unemployment as well as fluctuating oil prices. Though the traditional market for the cruise industry i.e. North America is making an economic recovery however, conditions in Europe are relatively discouraging due to sovereign debt issues as well as low economic growth. ...
Download paper
Not exactly what you need?

Related Essays

Securities Analysis and Portfolio Management (assignment)
Simon’s stockbroker is Louis who does not believe in making unnecessary changes to portfolios. Apart from some rebalancing after the initial impact of the credit crisis to make each of the ten holdings approximately equal in value at the time the portfolio has been largely unchanged for several years. Louis is no longer working as a stock broker and Simon is now using the services of Cheryl who has strong views about Simon’s portfolio. Cheryl, a graduate in finance from York University, believes that markets are essentially efficient and admires the work of Harry Markowitz and Fama and…
11 pages (2761 words)
Mortgaged Backed Securities
There are three classes of securities issued and traded, and these are assets backed securities (ABS), mortgage-backed securities (MBS) and collateralized debt obligations (CDO) (Blum & Dingell, 1997). As there are several kinds of securities, the primary focus of this section is the securities issues backed by mortgages – MBS. Understanding MBS is essential because it represents the largest portion of securitization in the United States (Nomura, 2006). In addition, apprehending MBS enables one to know the other forms of securitisation, as MBS is the “original source of securitisation…
19 pages (4769 words)
The Lehman Brothers Collapse. Who, Why, How and Its Long-term Effects on Securities Markets
There are a few terms which need to be defined before proceeding further. Security markets are the markets where securities of different types are bought and sold with reference to demand and supply. Mortgage markets involve dealings of loans on housing, business and industrial real estates. The markets in which corporations raise new capital by issuing common stock are referred to as primary markets. Secondary markets on the other hand are the ones where formerly issued securities are bought and sold among the investors, with no direct involvement of the corporations. Leverage is usually…
10 pages (2510 words)
Institutional ownership and corporate value
Abstract Institutional investors are a significant financial market force. They are rapidly replacing individual investors in the capital market. Unlike individual investors, institutional investors invest large amounts of their company resources into various stocks and shares, thereby devoting many of their resources to monitoring their investment. This paper investigates whether a company’s dividend policy is affected by the level of institutional ownership. The paper focuses on Kuwaiti public companies that are listed on the Kuwait stock exchange (KSE). This study examines the…
11 pages (2761 words)
Main Functional Metrics Employed to Measure ShareHolder Value
Many firms calculate the profitability in their own method of calculation where as investors take a different method to do the same, and it makes a hard time for the management of the firm to coordinate the results. An investor always focuses on the economic profits of the firm as well as looks at the extent of debt and equity that is invested in the business. Some of the important financial metrics employed to measure shareholder value are given below; 1. Shareholder Value Analysis (SVA) The shareholder value analysis (SVA) approach was developed by Alfred Rapport during 1980s and is used to…
5 pages (1255 words)
Finance (Derivative Securities)
Industry analysis means to analyze the whole industry in which different companies relating to a single industry would be dominated, analyzed and count. Though there are number of industries currently found in the entire world and every industry has its own recognition and importance in a broad nutshell. Among number of things that come under the ambit of finance, the name of derivatives is one of them. There are different things that stride under the ambit of derivatives, like SWAP, options and forward contracts (You-lan Zhu 2004). The main perspective of this assignment is to analyze…
3 pages (753 words)
Valuation of Securities
500,000, then I have to look at the options available to me and perform a detailed analysis of each. This would allow me to determine which is best considering the risk and return profile of each option. I have made the decision to assess a life insurance investment option and a fund which I will manage on my own. Other investments which could be considered include bonds, shares and mutual funds. Life Insurance Investment Investing the amount of ?500,000 saved with a life insurance company may allow me to receive a stable income on an annual basis with an adjustment for inflation. The…
9 pages (2259 words)