Fin222 Report

FIN 222 Corporate Finance Individual Major Assignment

This manual outlines the followings.  Objective of the assignment  Details of questions (Instructions will be provided wherever necessary.)  Format requirements  Printing requirements  Submission requirements

[90 marks]

 Objective of the Assignment

In Lecture 4 (CH7), you were introduced to the concept of systematic risk, as measured by beta. Beta is an indicator of an asset’s exposure (or vulnerability) to systematic risk and evaluates the degree to which an asset’s return is correlated with the market return. Beta is a key parameter in the Capital Asset Pricing Model (CAPM) which is most commonly used asset pricing model for the estimation of required rate of returns on a share (i.e. cost of equity). This assignment consists of two parts. Part I directs you to work with real financial data in Excel and aims to take you through to the basic exercise of estimating a company beta and computing statistics which can be evaluated as part of investment decision-making process. Part II requires you to write a report based on interpretations of the outputs obtained from the first part. Along the way, you will also find out how to download historical share price, market index data and interest rates from the web portal. To successfully complete this assignment, you are also expected to search actively for relevant current market information using a range of online and offline resources.

 Details of Questions

PART 1 [45 marks]

To successfully complete PART 1, please read each section carefully. You must read “Format and printing requirement” before you produce any outputs. I also encourage you to read the entire manual before you choose your companies for analysis. If you have read “Format and printing requirement”, then proceed.  Provide your answers (or outputs) for the following questions.  All the calculations and computations are required to be produced in Excel (This manual has been designed...