Your client, for whom you are writing the report, is a medical practioner. His knowledge of financial theory and financial mathematics is now at an intermediate level after some transitional study. His financial position has not changed in that he wishes to retire in 10 years, and is in a position to invest in sound investments for both short-term and long-term returns. He has done some research and has found a number of investments that he wishes to have analysed. As such, you do not have to search for viable investments for him. He has also explicitly communicated that the report should identify and detail the viability of the securities and that he is not expecting you to identify any additional investments. While you can garner a degree of information as to your clients financial position, you do not know his financial position. In the same manner, as in the previous report you presented to him, it is impossible to know how many of these investments he can purchase/invest. Therefore you are expected to provide advice on each investment in isolation from the other investments, i.e. not as a portfolio of investments.

Introduction (100 words) Comprising a discussion on the purpose and context of the report.

Discussion / Analysis Providing the full description of the mathematical workings for all projects and discussion on the theoretical aspects identified by the manager.

Conclusion (100 words) Summarising the discussion and possible investments and providing guidance and recommendations to the queries provided by your client.

1. Identify and outline some of the features of alternative equity valuation models. Are the assumptions underlying the models reasonable? Are the input variables able to be accurately estimated in practice, and if not, what are the practical implications of this result?

3) In your own words, compare and contrast the notions of weak-form, semi-form and strongform market efficiency. Why market efficiency is important to financial managers?

4) Provide a brief discussion on the inherent risk in stock returns in a portfolio of shares using the concepts of standard deviation and diversification as a basis for your discussion.