ASSESEMENT 2: CASE STUDY
Assessment Brief: BUS1007/SBM3207 Trimester 3, 2021 Assessment Overview Assessment Task Type Weight Length Due ULOs Assessed Assessment 1: Quiz Four quizzes covering topic material from Week 1 to Week 7 Individual Invigilated 40% 30 mins each quiz, total 120 mins (equiv. 2000 words) Week 3 Week 5 Week 7 Week 9 During Workshop [ULO1], [ULO2], [ULO3], [ULO4] Assessment 2: Case studies This is a non-invigilated group (maximum two) assessment. Please see below for detailed guidelines. Group 30% 2000 +/- 10% words Monday 29 Nov 2021 (beginning of Week 9) [ULO1], [ULO2], [ULO3], [ULO4], Assessment 3: Final Exam The student is required to sit a two hour (120min) final exam. The contents of the exam may consist of practical applications, case studies and problem- solving questions based on all topics covered in the unit. Individual Invigilated 30% 120 mins (equiv. 2000 words) Week 12 [ULO1], [ULO2], [ULO3], [ULO4], [ULO5] equiv. – equivalent word count based on the Assessment Load Equivalence Guide. It means this assessment is equivalent to the normally expected time requirement for a written submission containing the specified number of words. Assessment 1: Quiz Due date: Week 3, Week 5, Week 7 and Week 9 (during Workshop) Group/individual: Individual Word count/Time provided: 30 min each, Total 120 min. (equiv. 2000 words) Weighting: 40% Unit Learning Outcomes: ULO1, ULO2, ULO3, ULO4 Assessment 1 Detail Assessment 1 consists of four quizzes. They will assess your knowledge of key content areas (Weeks 1 to 7 contents) and will identify further support needs. To successfully complete the quizzes, please study the material provided (lecture slides, tutorials, and reading materials), attend the classes, engage in the unit’s activities and participate in the discussion forums. By completing this assessment successfully, you will be able to understand the finance function in contemporary business settings, the Australian financial system and the key institutions and regulatory bodies that operate within it, basic financial mathematics to understand financial products. Assessment 1 Marking Criteria and Rubric Marking Information: Each quiz will contribute 10% towards the total marks of this subject (total 4 x 10% = 40%). Marking Criteria Not Satisfactory (0-49% of the criterion mark) Satisfactory (50-64% of the criterion mark) Good (65-74% of the criterion mark) Very Good (75-84% of the criterion mark) Excellent (85-100% of the criterion mark) Identify the relevant financial concepts and principles, select appropriate methods, and use them to arrive at the correct solution. Answer reflects lack of basic understanding of relevant principles. Focuses on tangential rather than key issues. Answer reflects some basic understanding of relevant principles. Uses some appropriate information correctly. Answer reflects good understanding of relevant principles. Applies correct and appropriate procedures to arrive at the correct solution. Answer reflects clear understanding of relevant principles. Mainly focuses on key issues. Quantitative and qualitative analysis is strong. Principles are applied in the appropriate manner to arrive at the correct solution. The use of relevant principles shows creativity and imagination. Focuses on key issues and avoids or dismisses tangential issues. Quantitative and qualitative analysis persuasively supports the convincing recommendations and conclusions. Assessment 2: Case Studies Due date: Monday 29 November 2021 (beginning of Week 9) Group/individual: Group (maximum two students per group) Word count/Time provided: 2000 +/- 10% words Weighting: 30% Unit Learning Outcomes: ULO1, ULO2, ULO3, ULO4 Assessment 2 Detail Assessment 2 consists of four case studies where you will apply financial concepts and theories into real life situations. These case studies will assess your knowledge of key content areas (Week 1 to 6 contents) and will identify further support needs. To successfully complete this assessment please study the material provided (lecture slides, tutorials, and reading materials), attend the classes, engage in the unit’s activities and participate in the discussion forums. Case Study 1 15 marks Jane Fisher was a sole trader selling a range of hair care products to various hair dressing saloons for five years. However, in 2020 COVID-19 pandemic induced prolonged and frequent lockdowns resulted in cancellation of most of her orders and she had to shut down her business. After a six month search she joined Axis Ltd as a procurement manager. She sought the job in Axis as she has been a shareholder of Axis Ltd for 7 years and did not sell those shares even when she had to close her business. Analyse the two different types of business in this case study. Compare and contrast their advantages and disadvantages with examples. Case Study 2 15 marks Rory Williams is an independent management consultant with a portfolio of clients. One of his long term clients John Hawk has recently introduced Rory to Melody Malone who runs a secretarial service and has offered Rory a long term contract through which Rory expects to generate the following stream of cash flows. Cash flows will occur at the end of the nominated years. Cash Flows Year 0 Year 1 +$ 5,000 Year 2 Year 3 +$ 5,000 Year 4 – $ 2,500 Year 5 +$ 2,700 Year 6 Year 7 Year 8 $ 8,000 Year 9 Year 10 $20,000 Rory expects the market interest rates will be 2.5% p.a. for the next 5 years, then it will increase to 5% p.a. for the following three years (years 6 – 8) and will increase again in years 9 – 10 to 6% p.a. Assuming Rory’s expectations regarding cash flows and interest rates are correct, calculate the present value today and future value in 10 years time of all these cash flows. (Show all calculations and show answers correct to the nearer cent.) Case Study 3 25 marks Tim Shaw is a portfolio manager of a large fund. It is December 2021 and Tim intends to sell two bonds he holds. Each bond has a face value of $100,000, a coupon rate of 8% p.a., paid half-yearly, and a yield to maturity of 10% p.a. The first bond will mature in three years and the second bond will mature in 5 years. With the funds Tim intends to buy Sapphire Ltd shares. Sapphire Ltd shares just paid a dividend of $1.20 per share in December 2021. Tim believes the dividend is expected to increase by 20% in December 2022, 15% in December 2023, 10% in December 2024, and thereafter by 5% per year forever from December 2025 onwards. Tim requires a 12% p.a. return on Sapphire Ltd shares. If Tim sells both bonds and use the funds to buy Sapphire Ltd shares, how many shares he can buy? (Show all calculations to two decimal places, show final answer correct to whole number.) Case Study 4 35 marks Below is the monthly share price data for Afterpay Limited (ASX code APT.AX) for 2020 (Source: https://finance.yahoo.com) Month Open $ Close $ Jan 29.28 38.55 Feb 37.57 33.17 Mar 32.18 18.80 Apr 19.85 31.20 May 29.75 47.41 June 46.53 60.99 July 60.49 68.54 Aug 68.50 91.44 Sep 89.80 79.99 Oct 81.85 96.69 Nov 96.50 95.01 Dec 95.80 118.00 Afterpay Limited did not pay any dividend in 2020. a. Calculate the monthly percentage returns for APT for 2020. (Show all calculations, show answers as percentage correct to two decimal places.) b. Calculate the risk measured by the standard deviation for APT. (Show all calculations, show answer as a percentage correct to two decimal places.) c. If the standard deviation for the market is 8.02%, how does this compare with APT’s standard deviation calculated in part b? Explain your conclusions. Please note: Another 10 marks are allocated for formatting and references. Details are given in the marking criteria and rubric on the following page. https://finance.yahoo.com/ Assessments 2 Marking Criteria and Rubric The