Question

1. Assume you have AUD 100,000 that you must invest in a stock on 2nd January 2020. Select a stock from the data provided to invest. Justify your selection. (5 points) Data: daily stock price, beta and some fundamental indicators (EPS, DPS, D/E Ratio) Assessment criteria: o Basis and reasons for selecting the stock based on fundamental analyses. Qualitative analyses will be considered provided the arguments are rigorous and convincing. o Full details of investment in a table format with appropriate narrative of all relevant transactions that may occur in real world investment.

Ticker	Beta	Earnings Per Share	Dividend Per share	Total Debt/ Total equity
SYD.AX	0.92	0.175	0.380	0.806
FMG.AX	0.87	1.536	1.190	0.219
CSL.AX	0.51	4.615	2.020	0.321

Answer 1

I will be investing in CSL.AX because of following reasons-

A. Earning per share of the company is highest among all the other peers and it can be seen that the company is earning miles ahead of other companies and it is offering with a higher chance for me as a investor to capitalise on my investment because the share will be having a high valuation in the entire market out of all the three companies because other two companies have a very low Earning per share so Earning per share is discounted in the market as price to earning ratio.if we will be considering the price to earning ratio of all the three companies to the same then this company will be having the higher price.

B. Beta of this company has also been lowest among all three companies and beta is the representation of systematic risk associated with stock and hence it can be seen that the risk associated with stock is also lower so this makes it a liquid investment among other companies.

C. This company also distributes a higher amount of dividend as it has the highest amount of Earning per share so it is quite obvious that the company will be having a better distribution of dividend so this company is offering me as a great dividend is also.

D. Total debt to equity ratio of the company has been also moderate and acceptable as per the industry standards because this type of debt equity ratio can easily be manageable by the investor for the longer period of time as it is reflecting the solvency of the company in long run.

So it can be summarised that I will be selecting CSL.AX stock and I believe that it will be offering with the best return in the long run.