TFIN 603 Corporate Finance, Term 1, 2021 Major ASSIGNMENT
AUSTRALIAN NATIONAL INSTITUTE OF MANAGEMENT AND COMMERCE (IMC)
Due Date: Week 10, Monday 17h May at 5.00pm.
Course Weighting: 25% (This assignment is marked out of 100%)
Word Length: up to 1500 words + charts and tables. Need to work as a group of 2 students. Reference Style: Harvard
Presentation Guidelines:
- You are expected to write this assignment in Word format in a clear and logical manner and should include a cover page available on the IMC website. Each group has to submit one pdf assignment.
- You must use size 12 font Times New Roman, 1.5 line spacing, 1-inch margins and 1-inch top/bottom margins. Tables can be single-spaced and the font size should not be smaller than 8pt; and tables must be numbered sequentially using Arabic numerals. Any illustrations used must be very clear and easy to understand.
Assessment Criteria:
You should be aware that assignments will be checked for plagiarism. Plagiarism is punishable by reduction or cancellation of marks, and in the most serious cases, exclusion from a unit, a course or the University. This warning applies to a case where a student submits somebody else’s work as their own, AND to a student who willingly allows another to copy and submit their work. I expect your plagiarism match with any source (internet or other groups) to be less than 10%. Plagiarism policy is described in the TFIN603 unit outline.
Submission and Request for extension.
- Submit your assignment including a cover sheet through TURNITIN found on Moodle under the ‘Major Assignment’ icon. The electronic copy must have signed cover sheet with name and student ID on the Cover Sheet. Please remember that you are responsible for lodging the assignment on or before the due date.
- If you require an extension for this report then you need to contact your lecturer at least one week before the due date to make other arrangements.
Suppose you work as a junior analyst in one large Australian mining firm, which mainly export coal to Japan. The company has 100 million dollars to invest for up to 10 years in a financial instrument. Your boss, who knows a lot about finance, ask you to investigate the possibility to invest the full amount in one or more 10 year-bonds (for one or different countries) to diversify the risk of being totally exposed to the Japanese economy.
Your task is to write a report about 10 years government bonds (you can choice one or more of the countries/bonds in the data folder) and provide a recommendation for the company to invest (for example 30% in bond of country X and 20% on bonds of country Y, etc…). Other investments such as share will not be considered for the company.
This is a great opportunity to test your understanding of this financial instrument and understand what factors you should consider for this investment. For this assignment marks will be allocated in the following manner:
Please use the following format to write your report (Rubrics are in brackets):
- General introduction and characteristics of this investment (10-year government bonds).
[20 marks]
- Use the data in the file: 10 year bond.xls to construct a table of the correlation amongst each pair of all 10- year bond yield, described your results and investigates why some countries yield are very high correlated.
[20 marks]
- Given the objective of the firm to diversify from Japanese risk, recommend a portfolio investment for the next 10 years.
Domestic and international economic context (e.g. interest rates, exchange rates economic growth and inflation)
Diversification Risk/return Liquidity
[60 marks]
[Total Marks 100 marks]
General Information:
All data is available in the folder 10 year-bond. You do not have to buy any data for this assignment all data you need is either in the assignment folder or on the following websites:
http://www.tradingeconomics.com/bonds-list-by-country http://finance.yahoo.com/
http://www.rba.gov.au/chart-pack/exchange-rates.html http://www.ecb.int/stats/html/index.en.html http://research.stlouisfed.org/fred2/
To learn how to estimate correlations please see: Simple correlation: https://www.youtube.com/watch?v=uYgonHCug04
Correlation matrix:
How should I approach the assignment?
- Read Chapter.
- Make sure you understand very well : how bonds work
- Focus in government bond
- Par and face value
- The relationship between interest rate and bond prices
- The relationship between bond prices and other factors
- Research about the economic outcome in many countries (and the global economy) and make your economic assumption in the following areas:
- Economic growth forecast in key countries/regions
- Exchange rate (bilateral exchange rates to Australian dollar)
- Perspectives of government bonds in key countries/regions
- Bond liquidity and current prices
You can find this information at the central banks website: for example: http://www.rba.gov.au/
http://www.federalreserve.gov/ https://www.ecb.europa.eu/home/html/index.en.html
- Produce a correlation table
- Create a portfolio based on point 2 and 3.
Marking Rubric:
| Assessment Criteria and Performance Standards for Report | ||||||
| Assessment criteria | Mark | Performance Standard | ||||
| Low – Learning outcome not achieved | Low but some evidence of attainment of required learning outcome | Learning outcome achieved as required but some inaccuracies and errors | Learning outcome achieved as required with very few inaccuracies or errors | Exceptional attainment of learning outcome with additional outcomes and information provided | ||
| Executive Summary and introduction | /15 | 0 – 1 | 2 | 3 | 4 | 5 |
| No clear executive summary and introduction provided | Brief executive summary and introduction but incomplete and inaccurate | Executive summary and introduction provided but could be more concise and clear | Clear executive summary and introduction provided too wordy | Clear, concise and well expressed executive summary and introduction provided | ||
| Research and data collection | /25 | 0 – 1 | 2 | 3 | 4 | 5 |
| No evident research into the topic | Some research evident but little quantifiable research presented | Some research is evident but limited citations appropriate to context | Adequate secondary and some primary research is evident with supporting data and citations appropriate to context | Primary and secondary research and data collection is extensive with particularly insightful citations | ||
| 0 – 1 | 2 | 3 | 4 | 5 |
| Critical thinking, analysis & synthesis | /30 | Very little or no evidence of understanding of the topic | Some understanding of the topic evident but with little evidence of analysis | Understanding of the topic evident – some critical thinking with analysis and synthesis of available literature | Good understanding of the topic with evidence of critical thinking with deep analysis and synthesis of information | Very high level of understanding of the topic with insightful evaluative comments and conclusions |
| Conclusion and recommendation | /15 | 0 – 1 | 2 | 3 | 4 | 5 |
| No clear recommendation or conclusion Provided | Brief conclusion and recommendation provided but not particularly clear or relevant | Well summarised but not totally relevant to context | Well summarised clear, relevant and concise conclusion & recommendation | Exceptional conclusion & recommendation – clear, concise and insightful | ||
| Report Structure, writing style & grammar | /10 | 0 – 1 | 2 | 3 | 4 | 5 |
| Very poor | Some evidence | Structured | Good structured | Very good | ||
| structure, | of desired | report with | report with high | structured with | ||
| grammatical | structure with | average levels | level of writing | very high level of | ||
| expression and | low levels of | of writing ability | ability – clear | writing ability | ||
| spelling errors | writing ability | with some | concise | with no | ||
| evident, simple | spelling and | expression with | grammatical or | |||
| expression with | grammatical | few grammatical | spelling errors. |
7
| many spelling and grammatical errors | errors | or spelling inaccuracies | ||||
| Referencing | /5 | 0 – 1 | 2 | 3 | 4 | 5 |
| None or few references, citations or appendices | Some references but lacking in accuracy or proper use of a referencing style | Appropriate references with use of appendices to support main report but some inaccuracies in the use of a referencing style | Appropriate references with use of appendices to support main report; very few inaccuracies in the use of a referencing style | References fully accurate and report supported by extensive use of appendices and go well beyond suggested by lecturer | ||
| Total Marks and Feedback | /100 | Detailed Comments (these might be directly written on the hard copy or electronic copy | ||||
| Areas of improvement |
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