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QUESTION 3 Lord Groups of company is the leading investment company which deals in providing real estate and micro-finance services to their customers both locally
QUESTION 3 Lord Groups of company is the leading investment company which deals in providing real estate and micro-finance services to their customers both locally and international market. They have been in operation in Nigeria for the past eight years. They provide varieties of financing policies and banking services to their customers. They normally receive funds from their customers for fixed deposit and other investment plans for a specified period and also lease their estate building to people to rent or lease for a particular period and pay rent allowance on them. During the ninth year of operation, the economy went into recession which caused the company to record loses in that particular period. The financial status of the company according to finance analyst depicted that the losses was too huge to even cover their foreign and local debt finance sources and pay for their investment price. They have agreed to sell the company to Lloyds Investment Consult LTD. a) As an investment analyst of Ait Investment Consult Ltd, state and explain any possible investment risk likely to occur if the company go ahead to buy Lord Groups of company, AP(4 Marks) b) Assuming Air Groups of company decides to enter into the market to raise additional capital to finance their loses before selling the company. Discuss the various orderly processes in raising capital from the primary market. AN(4 Marks) c) As an investment analyst's consultant, what will be the possible role of a broker in this business transactions? d) An investor purchased an asset for $32 000 at the beginning of the year. This investment is worth, $36 000 at the end of the year. What will be the possible return for the year on the investment? AP(3 Marks) e) An Investor develops an interest to buy 100 shares at GHC500.00 per share in a certain financial institution, putting up a 70% margin. AN(3 Marks) i. How much equity would the investor have to provide in order to make this margin transaction? AP (3 Marks) ii. If the share price rise to GHC800.00 what would be the investors new margin position and profit if any if the maintenance margin is 30%. iii. Prepare a balance sheet extract AP(3Marks) f) According to financial times reports market efficient hypothesis implies that the expected average value of variations in the share price is zero. Therefore, the best estimate in the future price of a share is its price today as it incorporates all the overall information, is that right? QUESTION 3 Lord Groups of company is the leading investment company which deals in providing real estate and micro-finance services to their customers both locally and international market. They have been in operation in Nigeria for the past eight years. They provide varieties of financing policies and banking services to their customers. They normally receive funds from their customers for fixed deposit and other investment plans for a specified period and also lease their estate building to people to rent or lease for a particular period and pay rent allowance on them. During the ninth year of operation, the economy went into recession which caused the company to record loses in that particular period. The financial status of the company according to finance analyst depicted that the losses was too huge to even cover their foreign and local debt finance sources and pay for their investment price. They have agreed to sell the company to Lloyds Investment Consult LTD. a) As an investment analyst of Ait Investment Consult Ltd, state and explain any possible investment risk likely to occur if the company go ahead to buy Lord Groups of company, AP(4 Marks) b) Assuming Air Groups of company decides to enter into the market to raise additional capital to finance their loses before selling the company. Discuss the various orderly processes in raising capital from the primary market. AN(4 Marks) c) As an investment analyst's consultant, what will be the possible role of a broker in this business transactions? d) An investor purchased an asset for $32 000 at the beginning of the year. This investment is worth, $36 000 at the end of the year. What will be the possible return for the year on the investment? AP(3 Marks) e) An Investor develops an interest to buy 100 shares at GHC500.00 per share in a certain financial institution, putting up a 70% margin. AN(3 Marks) i. How much equity would the investor have to provide in order to make this margin transaction? AP (3 Marks) ii. If the share price rise to GHC800.00 what would be the investors new margin position and profit if any if the maintenance margin is 30%. iii. Prepare a balance sheet extract AP(3Marks) f) According to financial times reports market efficient hypothesis implies that the expected average value of variations in the share price is zero. Therefore, the best estimate in the future price of a share is its price today as it incorporates all the overall information, is that right
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