Permata Mutiara Holdings Berhad (Permata Group) is the holding company of the largest independent investment bank in Malaysia. Established for more than 30 years, Permata is a financial group in Malaysia with extensive experience in equity broking, investment banking. listed derivatives, treasury, corporate advisory, Islamic banking, wealth management and investment management. Permata Holdings Berhad was listed on the Main Board of Bursa Malaysia Securities Berhad in 1998. 

After graduation, you have successful join the company and been placed in Investment Department as an Analyst Associate. As a business graduate, the management has trust that you have an excellent knowledge and skills besides the capability you have shown during the interview. 

En Amir Dhalan, a Chief Finance Officer (CFO) have asking the Investment Department to prepare a few tasks for him to present for the company business planning for five years. You are one of the staff in the department has involve in these tasks. Mr Andrew Yap, the Investment Manager has segregated the tasks to few people in the department. The tasks have been given by Mr. Andrew for you to accomplish as follows: 

a) To evaluate the performance of the subsidiaries of Permata by providing the report on the value of its stocks according to CAPM. You have to plot the Security Market Line (SML) for all the stocks. The stocks are listed are: 

1 Permata Mutiara Plantatio

2 Permata Mutiara Hotel 

3 Permata Mutiara Banking 

4. Permata Mutiara Unit Trust 

5 Permata Mutiara Insurance 

b) To evaluate the FIVE (5) stocks either they are optimal portfolio and best possible risk and return according to Markowitz in Modern Theory (efficient frontier). 

c) To evaluate all the FIVE (5) stocks according to the Discounted Dividend Model (DDM) either by constant growth model and/or multiple growth model. 

d) The group is considering to buy bonds from foreign countries. You have to recommend TWO (2) countries after analyze according to the SWOT, the strength and weakness of the firm, risk analysis and return. Besides, the main factor you have to look at the bond rating. 

e) The group also considering to buy Malaysia Government Securities and few stocks either locally or globally. Before recommend, you need to analyze those stocks according to your knowledge. f) Analyze and evaluate the outcome from your valuation Recommend to the management and summarize your findings. 

INTRUCTIONS: 

1) To create your own figure of Beta, risk free rate, expected rate on the market portfolio, expected return and etc. Refer to (a) and (b). 

2) Create your own growth rate of dividend, required rate of return (as in (3)). dividend per share. Refer to (c).

Answer rating: 100% (QA)

a EVALUATION OF PERFORMANCES OF SUBSIDIARY ON THE BASIC OF CAPM AND SML securities market line is re... View the full answer