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Hello my tutor. I really need your assistance with these
Hello my tutor. I really need your assistance with these questions. Please be accurate. Thank you.
Running Head: BGOUY ANALYSIS !1 Bang & Olufsen Group was founded in the year 1925 in Struer Denmark by Peter Band
and Svend Olufsen. They are developing high quality, innovative audio, and visual solutions and
recognized for their innovation and quality of the product. They have two primary business
segments Bang & Olufsen and B&O PLAY. It was one of the chosen ADR for investment in the
Name of the Percentage change firm in stock price Bang & 3.51% Primary reason Announcement of share buy-back. Olufsen
Source: (Bang & Olufsen, 2016)
The performance of BGOUY was not significantly fluctuating during September 2016
(Refer Appendix A). The announcement of buy back of shares will have impact on the stock
price of the company. It will create a shock to the investors, it tends to have some jerks and
shocks in the market. But at the same time it can have positive influence as a company will buy
back shares if they have sufficient profits.
BGOUY is listed in NASDAQ OMX market, and it was generating a lower return over
the period based on the daily index movement. But the price movement of BGOUY was positive
at 0.338% over the period (Nasdaq, n.d.) (Refer Appendix B). The S&P 500 market return during
the same period was lower at 0.043% when compared to the BGOUY. It indicates that the
performance of the stock was better that both the stock markets. BGOUY has outperformed their
domestic market, and they have outperformed the international market. Poor market return
indicates the poor market performance, but it did not influence the performance of BGOUY. BGOUY ANALYSIS !2 Correlation between BGOUY and NASDAQ OMX is 0.25393 (Refer Appendix B). It
indicates that it is positively correlated with the market but they are less positively correlated
with the market. It is evident by from the return that BGOUY generated when compared to the
NASDAQ OMX. Correlation between BGOUY and S&P 500 index is 0.34769 indicating that
BGOUY is positively correlated but has less correlation with the S&P500 market.
From the thorough analysis of the annual report of BGOUY, it is clear that they rely
heavily on the international market for their revenue generation, and significantly higher part of
the revenue is generated from outside country. ?The exchange rate has more influence on the
entire business (Bang & Olufsen, 2016, p. 12)?. They are spending hugely on research and
development to develop best innovative products that will enable them to remain competitive
and to gain more market share. Regional segmentation of the business is Europe (includes
Denmark), North America, BRIC and Rest of world.
The movement of US dollar against the DKK is fluctuating there was significant change
during September 7, 2016 when compared to September 22, 2016 (Onda, 2016) (Refer Appendix
B). The graph shown indicates the change in DKK value for one USD. The decrease in the graph
indicates the strengthening of DKK against USD and increase in the graph indicates about the
strengthening of USD against DKK. A remarkable fact between the movement in the stock and
the exchange rate during the period provides a better understanding of the influence of exchange
rate over the stock price.
The stock price has control over the exchange rate movement. Whenever DKK is
strengthening against USD, then there was a decrease in the stock price of the company.
Similarly, whenever USD strengthened against DKK, there was an increase in the stock price of BGOUY ANALYSIS !3 the company. It clearly indicates that exchange rate has an influence on the stock price of the
company. Most of the sales are generated from outside the country and thus, increase or decrease
in the exchange rate will have both positive and negative performance of the stock.
When a business is generating revenue from various countries that has different exchange
rates, then it will have an impact on their financial statement. If the domestic currency weakens,
then the amount of revenue and receivables will increase and then it decreases if the domestic
currency strengthens and vice versa in case of payables. It will have impact on the stock price. BGOUY ANALYSIS !4 Appendix A ! Appendix B
Correlation between BGOUY and OMX 0.25393 Correlation between BGOUY and S&P500 0.34769 BGOUY ANALYSIS !5 Appendix C !
Source: Onda, 2016. BGOUY ANALYSIS !6 References
Bang & Olufsen. (2016). Annual General Meeting in Bang & Olufsen a/s. Retrieved from
Bang & Olufsen. (2016). Annual Report. Retrieved from
Nasdaq. (n.d.). Bang & Olufsen Unsp/Adr (BGOUY) Historical Prices & Data - NASDAQ.com.
Onda. (2016). Historical Currency Converter - OANDA Solutions for Business. Retrieved from
This question was answered on: Feb 21, 2020
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