FM Assignment - June 2023
FM Assignment - June 2023
GROUP ASSIGNMENT
Objective
The objective of this assignment is to assess the application of theory and
knowledge gained in the above subject.
Date of issue
07th Oct 2023
Group Members
Date of Submission
Assignment
You are an analyst working for a Fund Management Company in Sri Lanka
and now looking at the prospect of investing in a Company. You are required
to select a listed company with a regular dividend payment history and
decide whether the selected company is a good buy.
2. Analyse the historical annual dividends and estimate likely dividends for
the next three years, stating clearly the rational of your choice to estimate
dividends.
5. Estimate the cost of equity of the selected company based on the Capital
Assets Pricing Model (CAPM)
6. What is implied by the beta factor of the selected company with All Share
Index?
7. Estimate the stock price (fair value) you expect to prevail for the selected
company using a suitable dividend valuation method and/or other valuation
techniques and determine whether it is properly valued with the correct
buy/sell recommendation.
Marking Scheme
5. Identify the factors that should be taken into account in constructing the
Capital Asset Pricing Model (CAPM). Calculate the cost of equity of the
selected company using CAPM model. (15%)
6. Explain the meaning of beta factor and interpret it with respect to the
selected company. (10%)