QUESTION 1 (Marks : 25) You have been appointed as the new investment manager for Retire-Easy Investments. In your first meeting with your investment team and analysts you have set out what the goals and performance targets of the team should be as Retire-Easy investment funds have underperformed compared to your benchmarks over the past five (5) years. REQUIRED: Q.1.1 Your first point of concern is that the previous investment strategy focused too much on potential companies that followed a profit rather than a wealth maximisation approach. Explain to the team the differences between the two approaches and focus on any three drawbacks of following a profit maximisation approach. (10)

Q.1.2 Another key part of your teams new investment strategy will be to focus on companies where the financial managers have been making key investment decisions. Describe what the investment role involves for a financial manager. In addition, do some research and in your answer discuss any company located within South Africa which has undertaken a merger, acquisition or divestment of other companies over the past five (5) years, the reasons for doing so and any benefits or drawbacks that have resulted from undertaking this decision. Remember to provide references and to use your own words. Use the following headings in your answer: The investment decision role of the financial manager. South African company and background to transaction. Benefit and drawbacks.