Posted: September 20th, 2022

Question

FinancialMarketAnalysis x

You are a Financial Analyst that has been appointed to lead a team in the production of a report

to some potential investors regarding participating in the financial market. In teams of
FOUR

(4), you are required to provide information on the following sections:

Section A – (Total 10 marks)

· An Overview of Financial Markets

· The role of the Stock Market

·

Benefits of participating in the Stock Market from an investor perspective.

Section B – Select one of the following group of companies currently listed on the Jamaica Stock

Exchange (JSE) to conduct an analysis.
(Total 60 marks)

Group 1

Salada Foods Ltd and Seprod Ltd

Group 2

Mayberry Investment Ltd and Scotia Group Jamaica Ltd

The analysis will include the following:

· A brief overview of the companies selected.
(5 marks)

· Daily recordings of the trade volume, opening and closing price, percentage change in

price and whether the stock advance, decline or traded firm for each company over a two-week period, beginning March 14 – 25, 2022.
(20 marks)

· Use the prices recorded to form an index for each company, then construct the following:

o A
price-weighted index for the two stocks and compute the percentage changes

in the index for period 1 (Week 1) and period 2 (Week 2)
(10 marks)

o A
value-weighted index for the two stocks and compute the percentage changes

in the index for period 1 (Week 1) and period 2 (Week 2)
(10 marks)

o Explain the factors that you believe may have affected the share prices on the

market for both companies during period 1 and 2
(15 marks)

Section C – Financial Viability (Total 30 marks)

Assess the financial viability of the two companies given above by performing a company and

security analysis to determine if the stocks are over-valued or under-valued based on information

gathered from:

a) The stock’s price-earnings ratio
(5 marks)

b) The Price-Earnings Growth ratio
(10 marks)

c) The interest rate of the country
(5 marks)

d) Market capitalization to GDP
(5 marks)

e) The company’s activities, and revenues and profits generated
(5 marks)

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