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Financial final

· Individual task

· You should prepare an executive memo and submit a document in Word format. Wordcount 2000.

· You should submit by email an Excel file used to perform your calculations.


· Cover, Table of Contents, References and Appendix are excluded of the total wordcount.

· Font: Arial 12,5 pts.

· Text alignment: Justified.

It assesses the following learning outcomes:

· Demonstrate a deep understanding of the role of financial markets and financial institutions.

· Understand the primary classes of mutual funds available to investors and the benefits of different investment funds.

· Understanding NAV calculations

· Understanding the relation between risk and return


1. Assume you are an investment advisor. Your client is unsure what are the main benefits and reasons for investing in a Mutual Fund or in an index fund with an ETFs.

a. Explain the main differences and similarities between each other.

b. Explain what are the main advantages and disadvantages of investing in mutual funds or ETFs versus investing in Equity Stocks.

c. Explain the difference between investing in fixed income and an ETF that follows the S&P 500.

d. Explain the main difference between active and passive management

e. Explain what the difference between investing in value companies is or in growth companies.

2. Go to https://

a. What information does provide the Morningstar Style Box®?

b. Morningstar assigns a Rating to each Mutual Fund. What are the criteria they use to assign this rating?

c. Use the information provided above (style box and ratings) to choose 3 different funds (10 different assets per fund) to prepare 3 portfolios for 3 different types of investors:

i. Aggressive

ii. Moderate

iii. Conservative

d. In half a page for each portfolio, explain:

i. The rationale behind choosing the given funds per each portfolio

ii. The criteria chosen to build each portfolio

iii. The total amount to invest in each portfolio is 1.000.000€.

e. Follow up the prices for all 3 portfolios for a week. Calculate the return for each portfolio at the end of the week. Explain your results and show them graphically. Compare in the same graph the development of the three portfolios you have chosen and the development in the same period of the S&P500 index. Explain your conclusions.

f. Explain how much is your return in this period, and compare it to an investment in the S&P 500 index.

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