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AAPT Frankfurt SE Assignment

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14 views

AAPT Frankfurt SE Assignment

Uploaded by

Fadzie Kunze
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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AAPT GROUP ASSIGNMENT

Consider the following Stock market, Frankfurt Stock Exchange a) On your stock
exchange, describe, giving examples, how securities are classified into different
sectors (your description must be centred on classification by economic activity)
[ 25 Marks] b) Consider the major indices on your stock exchange and explain
how they are constructed [ 25 Marks]. c) Use the Size-style quadrant to group
stock that trade on the Frankfurt stock exchange Make sure you clearly explain
the methodology used to do the grouping (E.g for large cap, show the min
market cap for a stock to be called a high cap stock) , where there is a formula
used, show it. Your quadrant must be filled with ticker symbols of stocks, then at
the end of your assignment provide an appendix for the stock names along with
a ticker symbol [ 35 Marks]. d) Write up [ 15 Marks]

a) Classification of Securities by Economic Activity on Frankfurt Stock Exchange:

Securities on the Frankfurt Stock Exchange are typically classified into different
sectors based on the economic activity of the companies issuing them. These
sectors help investors and analysts understand the market and make investment
decisions. Here are some examples of sectors and their respective companies:

1. **Automotive Industry:** This sector includes companies involved in the


manufacturing and distribution of automobiles and related components. Example
companies: Volkswagen AG (VOW3), BMW AG (BMW), Daimler AG (DAI).

2. **Financial Services:** This sector encompasses banks, insurance companies,


and other financial institutions. Example companies: Deutsche Bank AG (DBK),
Allianz SE (ALV), Commerzbank AG (CBK).

3. **Technology:** Companies in this sector are focused on technology and


innovation. Example companies: SAP SE (SAP), Infineon Technologies AG (IFX),
Deutsche Telekom AG (DTE).

4. **Healthcare:** This sector comprises pharmaceutical, biotechnology, and


healthcare-related companies. Example companies: Bayer AG (BAYN), Fresenius
SE & Co. KGaA (FRE), Siemens Healthineers AG (SHL).

5. **Energy:** Companies engaged in energy production and distribution fall into


this sector. Example companies: RWE AG (RWE), E.ON SE (EOAN), Siemens
Energy AG (ENR).

6. **Consumer Goods:** This sector includes companies producing consumer


products. Example companies: Henkel AG & Co. KGaA (HEN3), Beiersdorf AG
(BEI), Delivery Hero SE (DHER).

These are just a few examples, and there are many more sectors covering a wide
range of economic activities on the Frankfurt Stock Exchange.

b) Construction of Major Indices on Frankfurt Stock Exchange:

The major indices on the Frankfurt Stock Exchange, such as the DAX and MDAX,
are constructed using market capitalization-weighted methodologies. Here's how
they are typically constructed:
1. **DAX (Deutscher Aktienindex):** The DAX is composed of the 30 largest and
most liquid companies listed on the Frankfurt Stock Exchange. The index is
constructed based on the total market capitalization of these 30 companies.
Each company's weight in the index is determined by its market capitalization
relative to the total market capitalization of all 30 companies.

2. **MDAX (Mid-Cap DAX):** The MDAX consists of the 60 largest mid-cap


companies after the DAX constituents. Similar to the DAX, it is also constructed
using market capitalization-weighted methodology.

c) Size-Style Quadrant for Frankfurt Stock Exchange:

To create a size-style quadrant for the Frankfurt Stock Exchange, we can use the
criteria of market capitalization to group stocks into different categories. Here's a
simplified example:

- **Large Cap (High Cap):** Stocks with a market capitalization greater than €10
billion.

- **Mid Cap:** Stocks with a market capitalization between €1 billion and €10
billion.

- **Small Cap (Low Cap):** Stocks with a market capitalization less than €1
billion.

Here are some ticker symbols of stocks in each category:

**Large Cap (High Cap):**


1. Siemens AG (SIE)
2. Deutsche Post DHL Group (DPW)
3. BASF SE (BAS)

**Mid Cap:**
1. Zalando SE (ZAL)
2. Wacker Chemie AG (WCH)
3. Aroundtown SA (AT1)

**Small Cap (Low Cap):**


1. Deutsche Beteiligungs AG (DBA)
2. Varta AG (VAR1)
3. TLG Immobilien AG (TLG)

Please note that these market cap thresholds are simplified, and the actual
classification may vary depending on the methodology used by financial
institutions and indices.

d) Write-up:

In this assignment, we explored how securities are classified into sectors based
on economic activity on the Frankfurt Stock Exchange. We also discussed the
construction of major indices like the DAX and MDAX, which play a crucial role in
tracking the performance of the German stock market.
Additionally, we created a size-style quadrant based on market capitalization,
categorizing stocks into Large Cap, Mid Cap, and Small Cap segments. This
quadrant helps investors assess the size and style of various stocks listed on the
Frankfurt Stock Exchange.

Overall, understanding these classifications and indices is essential for investors


and analysts to make informed investment decisions in the dynamic world of
stock markets.

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