- Part A Group Project 90 marks
This project will further your understanding of how financial markets work and allow you to develop an insight into the pricing of financial instruments (and the factors which may cause prices to change). By working in a group you will be able to actively discuss the issues surrounding the assigned questions. In order to successfully complete this project you will utilize the theory studied in class, information provided on Blackboard, and other appropriate resources. Answer all questions.
[Total: 5 marks]
Five marks of the 90 marks are allocated to the presentation of your assignment. For example, to receive full marks for this your assignment must adhere to the formatting requirements, be well presented with graphs and charts labelled and include references.
[Total: 20 marks]
Equifax (ticker: EFX) is a listed company on the NYSE. Look at the daily share price of the company for the period 1st January 2017 to 1st January 2018. Identify any major news, events or issues related to the company that impacted EFX’s share price by 5% or more on the day of release. You should include a price chart at bare minimum, with annotation, which clearly shows each major news impact on the price. (10 Marks).
Evaluate the news impact on price and provide an explanation as to what happened and why it impacted the share price. Carefully evaluate whether the actual effect of the issue matches your expectations based on the theoretical effect, and provide an explanation if you believe there is a difference. (10 Marks).
[Total: 35 marks]
What is the current price of ordinary common shares BHP Billiton (use the Australian listed stock, ticker: BHP AU)? Using an appropriate chart sourced from Bloomberg, describe how this price has evolved over the past 5-years, and compare its performance to an appropriate index (15 Marks).
What has been the main driver(s) BHP’s share price movement? Using an appropriate ratio, evaluate whether BHP is currently over/under-valued (7 Marks).
Use the technical analysis tools introduced in lecture 4 to predict where the share price of BHP will be at the 31st December 2018 (5 Marks).
What would your recommendation be with regards to buying or selling these shares right now? Justify your answer. (3 Marks)
Based on your analysis of part c) and d), what does your recommendation mean for the concept of market efficiency? (5 Marks).
[Total: 30 marks]
Consider investing in Woolworths Limited (WOW). Make an investment recommendation based on the theoretical value of WOW. Any assumptions that you rely upon should be clearly stated in the assignment. This requires you to complete several steps:
Undertake an industry and company analysis (see supplementary resources on Blackboard) (20 Marks).
Select the most appropriate present value model and derive a theoretical price for the share (8 Marks).
Determine whether you would invest in the company’s ordinary shares (2 Marks).
You should assume that the required rate of return is given by the Capital Asset Pricing Model, the equity market risk premium is 5%, and the risk-free rate is equal to the RBA cash rate at the time of your analysis. Any other assumptions that you rely upon should be clearly stated in the assignment.
You may find the following websites useful for part A.
Yahoo! Finance – www.finance.yahoo.com
Australian Securities Exchange – www.asx.com.au
Reserve Bank of Australia – www.rba.gov.au
Part B Bloomberg Market Concepts (Individual Component) 10 marks
Bloomberg Market Concepts (BMC) is an 8-hour self-paced e-learning course consisting of 4 modules – Economics, Currencies, Fixed Income and Equities. This is a completion component. i.e. you simply must complete BMC. You should attach each student’s certificate of completion to the back of the group assignment. You do not need any previous knowledge to complete this section of the assignment.
4000 words
