FINM7407 Individual Assignment - Derived Financial Market Analysis
Learning objectives:
• Analyse risk management in finance institutions
• Measure the performance of financial institutions
• Appraise securitisation, corporate capital raising, credit ratings, and international banking
Word Count: 1500 (+/-10%), excluding figures, appendix, and references
Assignment Questions
Question 1: Analyse Risk and Challenges Marks 15
The COVID-19 pandemic has impacted the capital markets, investors, and businesses in many different ways. Using the monthly stock market data for the last 12 months preceding the pandemic and up until December 2021:
a. Briefly discuss the stock price reactions of the COVID-19 pandemic on the financial sector industry. (Marks 10)
b. What are the key risks and challenges do financial industries face during the period of a crisis? (Marks 5)
Sectoral/Finnacial sector stock exchange data can be obtained from various sources, such as, https://www2.asx.com.au/ or yahoo finance https://finance.yahoo.com/screener/predefined/ms_financial_services/
For this question, you can consider the case of any country or stock exchange for which stock market data is available.
Question 2: Measure the performance of financial institutions Marks 10
As COVID-19 hits a global scale, Central Banks around the World started to cut their cash rate. Reserve Bank of Australia, for example, cut interest rates by 140 basis points from 1.5
FINM3414 Dr Md Shahiduzzaman
percent in May 2019 to 0.1 percent in November 2020. These rate cuts have savagely eroded bank margins.
a. Discuss with evidence the key challenges a bank face in an environment of low-interest rate margin. (Marks 5)
b. Discuss how regulations can help to mitigate financial sector risk. (Marks 5)
Question 3: Securitization, corporate capital raising, credit ratings, and international banking. Marks 10
1. Discuss the importance of corporate governance on capital market efficiency. (Marks 4)
2. Use the ASX webpage http://www.asx.com.au/prices/upcoming.htm to identify upcoming IPOs.
a. What is the industry classification of these IPOs? (Marks 2)
b. Discuss the factors that influence the timing and pricing of IPOs. (Marks 4)
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Assessment Guidelines
Submission format
• The length of your submission should be 1500 words (+/-10%) excluding charts, appendix, and references. Use 1.5 line spacing, 12 font-size ‘Times New Roman’, ‘Normal’ margins, justified paragraphs, and page numbering in the bottom right-hand.
• Word count does not include graphs, appendix tables, and references.
• Please insert your full name (family name entered last in capital letters) and eight-digit student number as a header on every page of yours.
• As a rule of thumb, using shorter paragraphs or sentences improve readability. Footnotes should be kept to a minimum. Please make sure we can follow where one section ends and the other begins, i.e., use subheadings to guide the reader.
Further instructions
• There could be more than one answer acceptable to the examiners. However, it is your responsibility to defend your answers coherently in your written submission.
That is, providing vague comments or disjointed arguments are not acceptable answers. Similarly, any jargon or acronym should be followed by a brief definition or explanation when first used, e.g., for RBA, Reserve Bank of Australia should be mentioned in the first place.
• Once again, you need to pay close attention to your arguments being coherent from one question to the next. A better approach is to address both sides of an argument (i.e. pros and cons), and either stop there or if you feel strongly about taking a position, clarify why you are doing so. Once again, as long as your arguments are presented coherently, either approach would be acceptable for assessment purposes.
• It is good practice to initially develop your answers without worrying about the prescribed length. Once you believe you have completed your literature review (i.e. reading what others have published), you can then work towards polishing and cutting it down to size. Make sure you follow the submission guidelines.
• You are responsible for submitting your assignment on TurnItIn. Once you are happy with the TurnItIn similarity report on your pdf file that copy becomes your ‘final’ copy. Please note that leaving the TurnItIn submission to the last day may work against you because there is a 24 hours delay between resubmissions and the generation of the originality report. That is, the first report is generated within minutes, but each report thereafter has a 24 hours delay.
• Please be aware that plagiarism, partly defined as copying and pasting someone else’s words into your assignment without proper acknowledgment, is unacceptable at UQ. Similarly, when you report someone else’s comments or ideas, you need to fully acknowledge the source right next to it. Sources you use should be placed after each question (Q1, Q2, and Q3). Use the Harvard Referencing Style (see Blackboard under Assessment) for referencing.
• Submissions will be electronically checked for similarity using TurnItIn (the extensive checking process involves the World Wide Web as well as previously and currently submitted assignments, journals and various other publications). Before finalising your submission, you should use TurnItIn to make sure similarity for any given source is as low as possible. It is also highly recommended that you take the online