Financial Markets and Investment Analysis

FINANCIAL MARKET INVETMENT ANALYSIS

(MBA-S3, June 2014)

Teacher’s Name: Dr. Vijay Shenai

Submitted by: SOHAIL BAJWA

Student ID: C0395KKKK1013

Company Allocated for the Assignment:

Experian PLC

Total Words: 2,211

(Excluding Reference List &Appendixes)

TABLE OF CONTENTS

INTRODUCTION: 3

A- Market Model and Its Implications 4

Interpretations of Experian PLC Regressions Results 5

Sector Regression Analysis 6

Interpretations of Sector Regressions Results 6

B- Equity Market Risk Premium 7

Calculation of Market Risk Premium 8

Yield Curve 9

Importance of Yield Curve 9

C- Computation of Return of Company and Sector by CAPM 10

D- Comparison of Actual Return with CAPM Results 10

Critical Analysis of Efficient Markets, Portfolio Theory and CAPM 11

Usefulness of Efficient Markets 11

Critical Review 11

Usefulness of Portfolio Theory 12

Critical Review 12

Usefulness of Capital Assets Pricing Model (CAPM) 13

Critical Review 13

Reference List 14

Appendices 15

INTRODUCTION:

Experian PLC is a leading global information services company. It is providing business services like prevention of frauds, automate decision making process, credit risk management and target marketing offers as well as to individuals for credit check reports and protect against identity theft. Experian is operating with a vision to make data and technology a crucial part of every major consumer economy in the world.

This line chart compares the weekly share prices of Experian PLC against relevant Sector and entire market which is FTSE All Shares (FTAS) in United Kingdom from 1 January 2012 to 31 December 2012. Fluctuation can be seen in; however, Experian PLC share prices were relatively higher than Sector and market throughout the whole time frame.

To begin, share prices for Experian PLC and Sector followed a fairly similar pattern with a slight increase by Experian PLC in the first Quarter before falling again at the lower level in 2nd...