Article on BAE Systems company

BAE Systems is a public limited company working under the category of Defense, security and Aerospace. It is a multinational company headquartered in London, United Kingdom. It is a British based company and is focused towards providing products and services related to Aerospace, arms industry, and information security. It was founded back on 30th of November, 1999. The company is responsible for serving market around the globe as it has customers and stakeholders around the globe.

The company provides different kind of products related to Civil and military Aerospace, defense electronics related products, naval vessels, munitions, and land Warfare systems. Most of the services provided by the company are related to maintenance, consultancy, training and related activities associated with defense. This company is considered to be the biggest manufacturer of arms and related products in Britain (baesystems, 2019).

Barclays:

Barclays is a based multinational investment bank and is also associated with providing different kinds of financial services. It is headquartered in London, United Kingdom. It is working under the industry of banking and financial services. It is a public limited company and is listed at London stock exchange, New York stock exchange, and is also included in FTSE 100 component. The company was founded back on 17th of November 1690 in the city of London, Kingdom of England. The company is associated with providing products related to retail banking, commercial banking, investment banking and Wealth Management.

Company has approximately 80,000 employees according to the statistics issued by the company in annual report in 2018. It is considered to be one of the largest Banks in United Kingdom and around the globe. The company has recently enhanced its efforts in order to expand its products and services in order to become a global bank and is providing services to customers at global level. It has become a recognized nationwide bank as well in Britain (barclays, 2019).

Returns Graph of BAE Systems: 

Source: (Yahoo Finance, 2019)

            The above graph provides the movement of return from share prices of BAE systems ranging from 1st of February 2019 till 15 February 2019. This movement of share price represents return from share price for the first two weeks of February, 2019. The movement of the graph clearly suggests that the return from the share prices have been fluctuating and experienced positive movements as well as negative movements. Return on share prices clearly suggest that on one day the returns were positive while the other day the returns work negative. This clearly suggest that share price of this company during the first two weeks of February, 2019 experience significant fluctuations which means that amount of risk associated with investing in this security is high during the first two weeks of February, 2019. With high risk, it is important to understand that investors can on high amount of return as well and high amount of loss as well.

Returns Graph of Barclays: 

Source: (Yahoo finance, 2019)

            The above graph provides the trend for the stock return for Barclays during the first two weeks of February, 2019. The fluctuations in the stock returns clearly suggest that the company has been experiencing positive as well as negative Trend stock market related to their stock returns. In comparison with stock return movement of BAE systems, it can be suggested that the negative stock return fluctuation for Barclays is less as most of the time the stock return was positive and above zero. This clearly suggest that investors having Pessimistic approach towards stock market investment can invest in shares of Barclays while optimistic investors cat invest in shares of BAE systems. Amount of risk associated with share investment in Barclays is less as compared to the other selected company in this assignment. This suggests that the amount of probable profit or loss realized from share investment in Barclays will be less as compared to other selected company in this assignment.

Returns Graph of FTSE all share:

Source: (Yahoo Finance, 2019)

            The above graph represents the return for Financial Times stock exchange all share index for the first two weeks of February, 2019. The Financial Times stock exchange was created in 1984 and it is based upon London stock exchange. The movement of FTSE return in the above graph clearly suggests that the returns were positive for most of the time during the first two weeks of February accepts on 7th and 8th of February. On these two days, the returns are negative as compared to the positive returns on other days. The graph clearly suggests that the overall fluctuation in FTSE during the first two weeks of February, 2019 were mostly positive.

Market Specific factors responsible for influence:

            Share price performance of Barclays experienced decreasing trend as well during the first two weeks of February, 2019 mostly because of the fact that uncertainty in the economic situation of United Kingdom was influencing the profits of Barclays during the February 2019. The management of Barclays was continuously focused towards achieving better performance in order to avoid bailout. These all factors negatively influenced the stock performance of Barclays as uncertainty is not good for stock performance in any kind of stock market.

Stock performance of BAE systems show some negative returns during the first two weeks of February, 2019 mostly because of the fact that the economy of United Kingdom was not experiencing positive trend during February. The economy was facing uncertainty and it was influencing the share price of public limited Companies listed at London stock exchange. The company recently signed contracts with United States of America to provide them with military arms. The US Army signed to contract modifications with the company and it was a positive sign for the company during February, 2019. This positively influences the share price of the company in February.

So, it can be concluded that both the companies experienced some positive as well as negative news during the first two weeks of February, 2019. Positive news was responsible to influence the share price positively while negative news was responsible to influence share price negatively.

2)

Higher Risk:

            The above table provides the average return calculated for the selected companies and financial time’s stock exchange for the first four days of February, 2019. The table also provides the calculation for standard deviation calculated for the selected to companies and Financial Times stock exchange for the first four days of February, 2019. The results of the average return suggest that the average return of BAE systems is positive and higher as compared to Barclays. The average return of Barclays during the first four days of February was negative. If we compare all the three computed values for average return, the highest value of average return during the first four days of February was of Financial Times stock exchange.

As far as standard deviation is concerned, value of standard deviation for Barclays is highest as compared to BAE systems and financial time’s stock exchange. The value of standard deviation for Financial Times stock exchange and BAE Systems is almost similar. It is important to understand that higher value of standard deviation means that there is high variance of stock return from average return. It means that higher the standard deviation, higher will be the risk associated with that specific security. The highest value of standard deviation is for Barclays during the first four days of February which clearly suggest that the risk associated with shares of Barclays is highest as compared to other selected company and Financial Times stock exchange during the first four days of February.

Factors which might influence high risk of BARCLAYS:

Standard deviation of Barclays is highest as compared to the other selected company and Financial Times stock exchange. It is mostly because of the fact that Barclays is more associated with economy of United Kingdom as compared to the other selected company. The business operations of Barclays are expanded worldwide and are closely associated with the economic situation and financial situation prevailing at global level. This clearly suggests that economic situation, financial situation, and different news at global level will significantly influence the share price performance of Barclays as compared to the other selected company.

According to economics, share price of companies are influenced by related news and announcement in public. The exposure of Barclays is significantly higher than the other selected company. This evidence is a significant factor responsible for higher risk for Barclays as compared to the other collected company and Financial Times stock exchange.

3)

Crowd Funding:

            Crowd funding is a technique which is used in order to raise significant amount of capital by using collective efforts from different friends, family members, customers and individual investors. This approach is used in order to collectively collect capital to formulate a large pool of capital by using large pool of individuals. Primary source of crowd funding is mostly social media and crowd funding platforms. Platforms like social media help the crowd funding concept to enhance leverage and to reach to Greater number of individuals and it also helps the related individuals to enhance the exposure. It is considered to be a comparatively opposite approach to Business Finance as compared two traditional approach in which capital is raised by using sources like banks, Financial Institutions, and related sources. Crowd funding is mostly used by entrepreneurs in order to start their business plan at low level initially (fundable, 2019).

How Crowd Funding works?

            Crowd funding is a technique which is used by people, business community and charities in order to raise capital and money. The concept of crowd funding works through different involved individuals or organizations. These individuals or organizations invest ordinate in projects related to crowd funding. In return of crowd funding investment or donation, these individuals get potential amount of profit or reward. So, there is win win situation for the parties who are investing in crowd funding and parties who are raising capital by using this technique. It is important to understand that investing by using this kind of technique can be risky so it is important for the involved parties from both ends to conduct their homework properly before initiating this activity. It is considered to be one of the simplest techniques used for raising capital or money for any kind of business or Charity related activity (moneyadviceservice, 2019).

Advantages of Crowd Funding from investor perspective:

            There are some significant advantages of using crowd funding. One of the most significant advantages is that it provides access to thousands of investors willing to invest in any kind of business activity. Another significant advantage of crowd funding is presentation. By using the crowd funding campaign, individual is able to analyze his business plan from top level till the end. It will help the individual to extensively analyze his business plan which will be beneficial not only for his business but for the investors as well. Another significant advantage of crowd funding campaign is public relation and marketing. Different online marketing tactics can be used by using social media network during the crowd funding campaign in order to advertise and market the business plan. It will help to enhance the popularity of the business among the stakeholders (fundable, 2019).

Disadvantages of Crowd Funding from investor perspective:

            There are also some disadvantages associated with crowd funding. They are different risk associated with this technique like the return are not guaranteed, and it is possible that the business in which the investor is investing might not realized profit. It might be difficult to sell the shares in future because the shares are mostly hard to sell in such case and they are unlisted. It is comparatively easy for listed companies to issue their share in market and their profits are also guaranteed for stock market investors and related shareholders. It might be possible that the crowd funding platforms may go bust as well (moneyadviceservice, 2019).