Avon Hill Case Study

Enrique Flores Discussion Questions 1. Given the funds prospectus and Avon hills internal policies, what are the specific categories of stock that should be considered for the fund? The categories of stock that should be considered for the fund are leafy vegetable stock of companies with small market capitalisation, similar to the market capitalization of companies in the Russell 2000. Also invest in domestic issuers and in companies believed to have above-average growth potential. These categories of stock are going to acknowledge stock from diversified industries. Douglas will be putting adiposis in the technology and health care sectors and under angle in the finance, utilities, and manufacturing. 2. How would you describe to the consultants the investment strategy Paul Douglas is using to treat Small Cap Stock Fund? Douglas would use an glide path found on his outlook for the economy and the resulting implications for industries and the companies within those industries. He would be focusing on different industries and small capitalization companies within those industries. He plans to put overweight in applied science and Health Care and underweight in Finance, Utilities, and Manufacturing. He alike plans to set all other sector weights close to the weight in the benchmark index for the fund.

He also plans to spoil value and growth stock. 3. Of the stocks listed in portray 4, which ones would you exclude based on fit for the fund, and why? After analyzing the stocks listed on exhibit 4 and calculating its P/E ratios it was concluded that I would exclude not growing stocks. According to the stock valuation used by Morningstar, a fund would be considered growth, in the small-cap category, if its P/E were at least 17.85 and its P/B were at least 2.96. All of the stock that would be excluded have a P/E and a P/B lower than this and low ROE and thanks to this I considered them blend stock. Winnebago Industries (P/E =5.95, P/B=1.9); Applebee Intl Inc ( P/E=... If you want to get a full essay, order it on our website: Ordercustompaper.com

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