CASE STUDY 1: Bitcoin
[30 MARKS OUT OF A MAXIMUM POSSIBLE 100 MARKS]
EFB555 Advanced Applications in Finance
A lot has been said about Bitcoin in the public domain. Some embrace it and some oppose it. As
an experienced professional fund manager (10 years experience, fund size 10 billion), would you
invest in Bitcoin? Why or why not? If you choose to invest in Bitcoin, how many percents of
your portfolio will be in Bitcoin? Would your answers have changed if this is your first year as a
fund manager and the fund size is only 10 million?
Length: Max 1,500 words, excluding figures/tables/references. Please upload your report in a
Word document (GroupNumber_Case1.docx) on Blackboard.
Reminder: Please attach minutes of meetings (and other evidence of group correspondence, if
any) to the group report. Only one person needs to upload per group… Finance Group Work..
Finance Group Work
Many business people focus on controlling risks in their businesses. However, taking risk is one of the qualities of a good investor. Therefore, as a first year fund manager with a fund size of 10 million, there are several areas that I can invest in. Unlike other investors, I would invest 40% of the fund size on bitcoin. First, it is important to understand that bitcoin performs better than gold especially during financial crisis. A good example is the 2008 financial crisis whereby the price of gold was expected to increase but it did not. Conversely, bitcoin which is an emerging digital asset has caused the price of bitcoin to increase every financial shock. Basically, investment is all about liquidity of portfolio and the impact that the investment will have on the market. Investing 40% of the 10 million fund size on bitcoin would be possible because the asset is not huge and hence the liquidity will be high making it easier to sell and make profits..…….. Finance Group Work…………
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