Baku Higher Oil School

Course Work

Portfolio Management

Stratejic Analysis and Portfolio about Apple shares

Group members:Muxtarov Hikmet

Muradov Cavid
Ahmadov Arif

Teacher:David Solomonov
Module 1: Introduction to Portfolio Management

Task 1: Portfolio Objectives

Define your investment objectives, such as long-term wealth accumulation, income generation, or capital preservation.
Write a short essay explaining how your investment objectives influence your portfolio choices.

The options for investing your savings are continually increasing, but every one of them can still be categorized
according to three fundamental characteristics: safety, income, and growth.
Apple’s investment objectives can vary significantly among investors, depending on their individual financial
goals, risk tolerance, and overall investment strategy. Here's a short essay explaining how different investment
objectives can influence portfolio choices when it comes to Tesla stock.

Investment Objectives and Portfolio Choices: The Tesla Perspective

Investors considering Apple, Inc. as part of their portfolio must first define their investment objectives.
Apple has spent decades building relationships with consumers and has created its own ecosystem that consumers are
uncomfortable going beyond. This is an important competitive advantage for the company. A distinctive feature of Apple
technology is its design and ease of use
.
1.Long-Term Wealth Accumulation:The shares pay dividends with a yield of 0.5% per annum, and the company
also has record share repurchase programs. Over 10 years, Apple spent about $600 billion on buybacks. In the first
quarter of 2023, $19.6 billion was spent on share repurchases, and a new program for $90 billion was authorized.

2. Income Generation:Payment of dividends doing the Apple Inc the one of the best company for investors. Apple's policy is
to pay stock dividends four times a year. The board of directors is responsible for determining the cutoff date. The amount
allocated for the payment of dividends is up to 30% of Apple's net profit. After the register is closed, shareholders receive
money within a week.

3. Capital Preservation: Apple is a long-term, high-quality company with enviable returns in the technology sector. In
addition, its financial flexibility allows it to work on other growth drivers that create shareholder value. because of this,
apple is one of the best companies for preserving capital

4. Speculation: Speculative investors may view Apple as an exciting opportunity for short-term trading. Their investment
objectives revolve around capitalizing on price fluctuations, market sentiment, or news events. Their portfolio choices are
dynamic, adapting to rapid market changes and news developments.

5.Innovation and Technology Exposure: since apple releases new gadgets every year, this makes the company more
attractive to investors. Today, apple shares are one of the most favorable for investors.

One of the main advantages of investing in Apple stock is its strong financial performance. The company consistently
reports strong revenue and net income, indicating its financial strength and growth potential. In addition, the company has a
huge cash reserve of about $191.8 billion, allowing it to invest in research and development, acquisitions and share
repurchases.

Additionally, Apple's diverse product portfolio and recurring revenue streams provide long-term stability. The company has
a loyal customer base, and its products are constantly updated and improved, ensuring stable demand in the market.

Task 2: Risk and Return

Q Research and analyze historical data for a set of stocks and bonds.
Calculate the average returns and standard deviations for these assets. Create a report comparing the risk and return profiles
of the selected assets.
Risk and Return
Stock Analysis:
For Apple stocks daily, weekly, monthly return using the formula:
Return= Price Today-Price Yesteray /Price Yesterday
Price Today=182.96 $ Price Yesterday=182,35 $
 Price Today
182.96
Price Yesterday
182,35
Return
0,61

0,61/182,35=0.003345

Task 3: Risk Tolerance Assessment

Complete a risk tolerance questionnaire to determine your risk tolerance level. Write a reflection on how your risk tolerance
impacts your asset allocation decisions.

1. Cash Reserves: Risk tolerance would impact the level of cash reserves Tesla maintains. A higher risk tolerance

might allow for lower cash hold, while a lower risk tolerance might lead to larger cash reserves to weather

unexpected financial challenges or market downturns.

2. Hedging Strategies: Apple may employ financial instruments or hedging strategies to manage risk. The company's risk

tolerance would determine the extent to which it uses these tools to protect against adverse market movements.

3.Acquisition and Investment Decisions: Apple’s approach to mergers and acquisitions or investments in other

companies would be influenced by its risk tolerance. A higher risk tolerance might lead to more aggressive investment

in startups or complementary businesses, while a lower risk tolerance might result in more conservative acquisition

strategies.

Task 4: Asset Allocation Plan

Many financial advisors recommend a 60/40 asset allocation between stocks and fixed income to take advantage

of growth while keeping up your defenses.

Risk Tolerance: Apple’s risk tolerance is essential to determine how much of its assets should be allocated to different

investments. Given that it's a company, its risk tolerance may vary based on its current financial stability and market

conditions. If Apple is in a growth phase, it might have a higher risk tolerance, allowing for more investments in equities. If

it's in a more stable phase, it may opt for a more conservative allocation.
 Financial goals: Apple’s fundamental strategy is to squeeze as much profit as humanly possible from every sale it
makes.
Apple’s financial strategy, then, is to maximize its margins, a financial strategy it has pursued single-mindedly since
Steve Jobs returned to the company.
This foundational financial strategy informs every other aspect of its business model. Apple has a variety of
long-term goals. They are related to expanding its platform so that it reaches a
 large number of customers, opening more online and brick and mortar stores,
ensuring that the company earns stable revenue and profits and innovating new
hardware and software to increase its market share.

Equities: Apple shares are among the top most reliable assets in the global stock market. This technology company is one of
the largest corporations in the world by revenue and capitalization. Apple securities can be used for long-term investing.
Sharp jumps in the IT giant's quotes also allow traders who follow a speculative strategy to make money. Apple has very
strong competitive advantages, allowing it to continue to grow its customer base, revenue and profits in the coming years.

Bonds: Select Apple 10-year bonds currently yield about 5.20%, while some Meta 10-years yield 5.75%

Investors are flocking to bonds issued by (almost all) of the Magnificent Seven companies, drawn in by some of the juiciest
yields seen on such high-quality names.

Select Magnificent Seven 10-year bonds currently yield anywhere from about 5.20% for Apple Inc. (AAPL) to 5.75% for
Meta Platforms Inc. (META) In comparison, the implied dividend yield on Apple's stock at current prices was 0.54%, while
Meta doesn't pay a dividend.

Cash and cash equivalents: Apple's operated at median cash and equivalents of 34.94 billion from fiscal years ending
September 2018 to 2022. Looking back at the last 5 years, Apple's cash and equivalents peaked in September 2019 at 48.844
billion. Apple's cash and equivalents hit its 5-year low in September 2022 of 23.646 billion.

Alternative Investments: Apple could consider allocating a small portion, say 10%, to alternative investments like venture
capital or private equity for potential high returns.

Task 5:
Analyzing Tesla's equity for investment purposes involves a comprehensive process. Below is a written report detailing
Tesla's stock selection process and the reasons for considering Tesla:

1.Компания: Apple Inc. is an American corporation founded on April 1, 1976 in California by Steve Jobs, Ronald Wayne
and Steve Wozniak. Apple Inc. develops, manufactures and markets personal computers, mobile communications and
multimedia devices, portable digital music players, as well as related software, services, peripherals, networking solutions,
digital content and applications from manufacturers around the world.

2. Competitive Advantage: large financial capabilities, which allows the company to be one step ahead of competitors;
careful monitoring of trends in the digital technology market and the ability to quickly present the consumer with what he
needs;
a serious approach to business, which ensures a high level of company reputation;
the ability to select only highly professional employees for your staff;
Presenting any new product as relatively convenient to use for the consumer, as well as as an element of the image of a
person or company.

Reasons for Considering Tesla

Innovation and Leadership: Apple occupies a leading position in the global market. According to the world ranking, the use
of only smartphones from Apple accounts for 27% of the world

Profitability: According to a Fortune global 500 source, Apple ranks 8th in terms of profitability in the world ranking

Task6:
Sample Portfolio Asset Weightings:

-Apple stocks: 60%

-High-Quality Corporate Bonds: 30%

-Cash: 10%

Expected Return Calculation:

To calculate the expected return of the portfolio, we can use the weighted average of the expected returns of individual
assets. Let's assume the expected returns for our sample assets:

-Expected Returns of Apple stocks: 10%

-Expected Return of High-quality corporate bonds: 4%

-Expected return of cash: 0,5%

The expected return of the portfolio would be:

\[ Expected Return of Portfolio = (Weight of Tesla Stocks * Expected Return of Tesla Stocks) + (Weight of Corporate Bonds
* Expected Return of Corporate Bonds) + (Weight of Cash * Expected Return of Cash) \]

Expected Return of Portfolio = (0.60 * 10%) + (0.30 * 4%) + (0.10 * 0.5%)

Expected return of portfolio = 7.25%

The portfolio's risk can be calculated using the weighted standard deviations of individual assets and their correlations.

Task7: Diversification is the use of different sources for investing funds in order to reduce losses and minimize risks.

Stocks: Apple is mostly made up of stocks, so adding other stocks can reduce diversification

Bonds: Including in the portfolio can help reduce risk because tend to have an inverse relationship with stocks. Bonds

provide stability and income, which can offset potential losses in Tesla stock during market downturns.

Real Estate: Real estate investment trusts (REITs) or physical real estate assets can diversify the portfolio further. Real estate

often behaves differently from stocks, providing a hedge against stock market volatility.

Diversification is an increase in the efficiency of an entrepreneur, company, individual, or some process for distributing risk

accounts. The main goals of diversification are to find a competitive advantage, reduce the risks of business bankruptcy and

increase production profitability. However, it is important to note that over-diversification can reduce returns, so finding the

right balance is important. Additionally, Apple's risk factors, such as its exposure to the electronics market, should be

considered when assessing its place in a diversified portfolio.

Task8:Risk management

Just like the Limit Order, this is another form of trade with a different set of limitations. A Stop Loss Sell order is a
conditional sell order that will only execute if the price of the stock reaches a target price (set by the seller) or lower. For
example, say you bought Apple at $100 and they are currently trading at $104. I could set a Stop Loss order at $101. This
means that once the price of Apple starts to dip and hits $101, my order becomes an order to sell. This should limit any
losses I could take on my profits. If it sells at $101, then I still made a profit of $1 per share.

Explantion
Setting a stop-loss order for 10% below the price you paid for the stock will limit your loss to 10%. This strategy allows
investors to determine their loss limit in advance, preventing emotional decision-making. It’s also a great idea to use a stop
order before you leave for holidays or enter a situation in which you will be unable to watch your stocks for an extended
period of time.