Two part assignment attachedInvestment Analysis Investments Final Exam Part A. (70 points) Type...

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Two part assignment attachedInvestment Analysis Investments Final Exam Part A.  (70 points)  Type your answers in the space provided. Select one of the companies that you personally contributed to your team portfolio (the Part B group project stock selection cannot be chosen), · PLTR - Palantir 1.  Estimate the current valuation of the stock using Relative Value Ratios. Show your computations. Dividend Discount Operating Free Cash Flow Free Cash Flow to Equity 2.  Determine a Price Target 1 year from now and 5 years from now.  Briefly explain your inputs and logic. 3.  Recommend an option hedging strategy based on your 1 year price target.  Assume you own 1000 shares of the stock at the current market price.  Select either a covered call strategy or a protective put strategy.  Calculate the expected outcome in 1 year assuming the stock attains your 1 year price target. 4.  Recommend a Bull Call Spread or Bear Call Spread based on your 1 year price target.  Calculate the expected outcome in 1 year assuming the stock attains your 1 year price target.  Use 100 contracts for your option quantities. Part B.  (30 points)  Type your answers in the space provided. You want to retire in 40 years and realize that you must start planning now.  You decide that it is time to prepare an analysis about YOU.  Answer the following questions based on what you have learned.  Think critically and intellectually challenge yourself.  Demonstrate your investment knowledge. 1.  What approach will you use to advise yourself? 2.  What is your specific suitability profile? 3.  What is your investment plan for retirement? 4.  What will be your asset allocation and what is your expected annual return throughout your life for each allocation?  HONOR STATEMENT: I confirm that I have not received assistance of any kind on this exam.  I further confirm that I have not provided assistance to others and that I will not provide assistance to others who have not yet taken the test or to others that are taking the test. Signature:__________________________________________________ Date:____________________________ 1

Preeta · Accepted Answer

Part A:
1.  Estimate the current valuation of the stock using Relative Value Ratios. Show your computations.
The relative value ratios are:
Price/Earnings (P/E) = Share Price/ Earnings per share
		= 23.24/ -0.65
P/E ratio of Palantir -35.75
The company was in loss in the current year and so EPS was negative. 
Price/Book (P/B) = Share Price/ Book value per share
	= 23.24/0.82
P/B ratio of Palantir = 28.06
Price/Cash Flow (P/CF) = Share price/ Cash flow from operation
		= 23.24/ -156,572
P/CF of Palantir = 0.00
There was negative cash flow from operation due to loss. 
Price/Sales (P/S) = Share price/ Sales
	= 23.24/ 1,092,673
P/S of Palantir = 0.00
Most of the ratios shows zero value or negative value. Only P/B ratio shows value close to the market price of the share. But clearly, the Palantir shares are overvalued.  
2.  Determine a Price Target 1 year from now and 5 years from now.  Briefly explain your inputs and logic.

Investment Analysis Investments Final Exam Part A. (70 points) Type your answers in the space provided. Select one of the companies that you personally contributed to your team portfolio (the Part B...

Answer To: Investment Analysis Investments Final Exam Part A. (70 points) Type your answers in the space...

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