Australian Financial Review

Obtain or purchase a recent [i.e. less than three months old] copy of the newspaper Australian Financial Review or access the information online at this link http://www.afr.com/ (you can obtain a free subscription for one month) Refer to the page that provides details of shares currently traded on The ASX. TASK 1 Just like an investor, select ten listed ordinary share companies from and create a portfolio. For instance, select 3 shares from list of Information Technology, 4 shares from Energy and 3 from Financials 1. Using equity valuation methods taught in Week 6 and described in Chapter 10 calculate the value of each selected ordinary share investment in terms of your required rate of return. Hint: To answer the question, you will need to calculate the value of the companies selected, and to do that you need to demonstrate that you have learnt something about equity valuation. In your analysis, consider valuing the shares using the ordinary share discounted dividend model and then the comparable approach to valuing ordinary shares. Consider the principles that will determine the value of a company in your report. 2. Rank the ten investments in order of desirability. Explain why you have ranked them in this way. [10/40 marks for content and knowledge] 3. Which investment of the ten would you select? Why? [5/40 marks for content and knowledge] TASK 2 According to Warren Buffet, "Intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised. Two people looking at the same set of facts, moreover--and this would apply even to Charlie and me--will almost inevitably come up with at least slightly different intrinsic value figures." Warren Buffet is one of the richest men in the world. Research and summarise some interesting facts about Warren Buffet that you can relate to the companies you have selected from the Financial Review to analyse. [5/40 for content and knowledge] There are several YouTube featuring interviews and/or commentary by Warren Buffet about how to invest wisely. Below are three to get you started. Skip the ads, watch them and summarise the key points that he makes in relation to investment. • Warren Buffet Best Advice on Successful Investing: https://www.youtube.com/watch?v=_5VQPIeZhMc • Warren Buffet on Why He’ll Never Sell a Share of Coke Stock: https://www.youtube.com/watch?v=4p1_5bZ8I4M • Warren Buffet Financial Rules to Live By: https://www.youtube.com/watch?v=gUAtVyWS_4Y TASK 3 • Compare Warren Buffet’s approach to share valuation and the share valuation methodology in Week 6 - Chapter 10 and recommend which approach you prefer with one reason why. [10/40 marks for content and knowledge]