Term paper

Of
Security Valuation Principles
(Chapter-11)
Course name: Investment Analysis
Course no.: F-604
Submitted to Submitted By

1. B. M. Salah Uddin 39016

Prof. Dr. M. Farid Ahmed 2. Mamunur Rashid 39024
Dept. of Finance, University of 3. Shahadat Hossain 39027
Dhaka. 4. Md. Raisul Islam 39045
5. Ridma Hasin 39051

UNIVERSITY OF DHAKA
Letter of Transmittal

17th August, 2019

Prof. Dr. M. Farid Ahmed
Department of Finance
University of Dhaka

Subject: Submission of Term Paper on Investment Analysis.

Dear Sir,
We are pleased to present this term paper on “Investment Analysis”. This is to inform you that
we have successfully completed our report.

Working on this report has been really interesting & informative experience for us. We learned
many unidentified facts which we believe will be supportive to our academic & professional career
in the future. While doing this report, we learned to integrate plenty of information into a concise
volume. we have enjoyed working on this report and I hope that my report will meet the level of
your expectations. We would try our best and shall be obliged to provide you with any clarification
regarding the report.

Sincerely,
1. B. M. Salah Uddin 39016
2. Mamunur Rashid 39024
3. Shahadat Hossain 39027
4. Md. Raisul Islam 39045
5. Ridma Hasin 39051
Acknowledgement

Firstly, we would like to thank the Almighty Allah for giving m the strength, the patience, and the
knowledge to do this term report of Investment Analysis. we would also like to take this ultimate
opportunity with pleasure to thank my course instructor, Prof. Dr. M. Farid Ahmed, for giving me
the opportunity to do the term report on Investment Analysis. He has been very helpful to us
throughout the entire process and has always been there to help us heartily even through his hard
times. He helped us whenever we got stuck with my paper without even a slight bit of hesitation.
He proved himself to be a successful mentor all through his deeds and contributions for our
preparation.

Moreover, we would also like to thank the people who helped out in providing solution to every
problem through discussion, without any faulty. We really appreciate even the minor sacrifice they
made in doing that. Without their efforts, it would have been impossible for us to finish this report
at such convenience. We would also like to thank our friends and family members for showing us
their support and help me in every possible way throughout the entire work process. With presence
in every aspect, completing this task seemed as festive and interesting as ever.
Introduction

Psychologists suggest that the success or failure of an individual can be caused as much by his
or her social, economic, and family environment as by genetic gifts. Extending this idea to the
valuation of securities means we should consider a firm’s economic and industry environment
during the valuation process. Regardless of the qualities or capabilities of a firm and its
management, the economic and industry environment will have a major influence on the success
of a firm and the realized rate of return on its stock.

The valuation process is like the chicken-and-egg dilemma. For reasons discussed in the next
section, we contend that the discussion should begin with an analysis of aggregate economies
and overall securities markets and progress to different industries with a global perspective. Only
after a thorough analysis of a global industry are you in a position to properly evaluate the
securities issued by individual firms within the better industries. Thus, we recommend a three-
step, top-down valuation process in which you first examine the influence of the general
economy on all firms and the security markets, then analyze the prospects for alternative global
industries in this economic environment, and finally turn to the analysis of individual firms in the
alternative industries and to the common stock of these firms.