Financial Planning and the Unsystematic Risk Statistics Assignment

Financial Planning and the Unsystematic Risk Statistics - Assignment Example Therefore, during winter, people will prefer buying winter tyres and when summer sets in, the demand for dry weather tyres will be high. i. The best asset for Gemma to choose is Rolls-Royce since it has the highest monthly real return coefficients. This implies that they will guarantee a high interest as opposed to those with low return percentage. The objective of making an analysis of a company’s fundamentals is to find the intrinsic value of the stock as opposed to the value with which the stock trades at in the market. Therefore, in carrying out an analysis, if the intrinsic value happens to be more than the current share price, then it shows that the stock is worth much value than its price and it makes sense in buying a stock. However, if this is not the case, then using the stock-analysis strategy like in the case of Gemma is not useful. In addition, the stock-pricing strategy offers a lot of information in an intangible and unmeasurable manner. It is easy to find some aspects of the company that are quantifiable. Such aspects include profits and they are quite easy to find. However, it is quite difficult to measure the qualitative factors such as the competitive advantages of a company, company staff and the reputation of the company. Therefore, the aspects make the picking stocks a subjective and intuitive process thus not suitable in such a case. In addition, the human element evident in the forces moving the stock market, the stocks cannot do whatever one anticipates that they will do since there is a likelihood of having a change in emotions quite unpredictably. Therefore, when confidence turns into some fear, the stock market can be a bit risky and dangerous. Therefore, this also contributes to the decision by Gemma not to use the stock-pricing strategy. i. In order to protect their portfolio of shares, Mark Brisley and Evie Petrikkou used the call and put options. The put option allowed them to sell assets at a given agreed on price while the call shows the right to buy shares at an agreed price.