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HI5002 Research on Financial Market and Capital Budgeting Analysis Assessment Answer

Assessment Details and Submission Guidelines
T1 2020
Unit Code
Unit Title
Finance for Business
Assessment Type
Group Assignment
Assessment Title
Research on Financial market and Capital Budgeting Analysis
Purpose of the assessment (with ULO Mapping)
Students are enrolled a group up to 4 members to study, undertake research, analyse and conduct academic work within the topics of financial management from week 1 to week 9. (ULO 1, 2, 3 and 4)
40 % of the total assessments
Total Marks
Word limit
Not more than 3,000 words
Submission Guidelines
  • All work must be submitted on Blackboard by the due date along with a completed assignment cover page. Make sure that your group member’s name and surname, student ID, unit name, and code and lecture’s name are written on the cover sheet of the submitted assignment. A table of contribution by group members into group work is also to be provided in the cover page (please see the assignment cover page attached).
  • The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.
  • Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.
  • Submitted work should be your original work showing your genuine studying. Evidence of your original work (allocation of tasks, discussion, file exchanges, drafts, etc.) need to be presented in the records of your group work in Discussion Board or Group Blogs, available in Group Tools in your Group for Group Assignment. Your assignment WILL NOT BE MARKED by your lecturers without the evidence of your group work.
  • Three attempts of submission are allowed for checking similarity and final submission. Your lecturers only mark the final submission. As a guide, a similarity score of over 30% is considered as excessive except in the cases where the similarity is caused by the use of template provided by the lecturers, types of assignment, references or sources of data. Please note that it takes 48 hours for the self-check report to be available for your viewing. Please also note that fact findings and working at same case study project evaluation assignment like this one may yield higher than 30% similarity. Therefore, do not panic and shower your lecturers with emails about similarity after your submission if your work is genuine. Your lecturers will look at details of the similarity report and ensure a proper marking without any
bias on that threshold 30%.


Assignment Tasks

This assignment task is a written report that include 3 parts: Part 1 is a research and fact finding on Australian financial market. Part 2 is a fact finding of financial market regulation in Australia and Part 3 is a risk analysis and project evaluation. To complete the assignment, groups are recommended to obtain data and information from relevant web sites, especially websites of Australia Stock Exchange. Using secondary data (researches done by others) for fact findings in Pat 1 and Part 2 is NOT RECOMMENDED and will be PENALIZED


The assignment should cover the contents described bellows.

Assignment Structure and Details of Assignment Tasks
Briefly introduction of your group’s work: the purpose of assignment, key findings and structure of the assignment (not more than 300 words)
Part 1. Research and fact finding of Australian financial market
Comparison of four key financial institutions: commercial banks, insurance companies, investment banks and investment funds in Australia from the perspective of a potential investor who would like to invest into the institutions
Criteria for comparison include: (1) classification (the group of financial institutions it belongs to); (2) market sector of operation; (3) key business activities; and (4) main source of income. Organize your group’s comparison in a relevant table. Your group’s research should be supported by a fact finding of real life examples of a commercial bank, insurance company, and investment bank and investment fund in Australia. Your group’s discussion on each example should reflect the above mentioned criteria and the following information: (i) what is the code of stock listed, (ii) when was the company’s stock was first listed, (iii) what is the current market capitalization of that stock, (iv) the current total share outstanding, (v) who is the chairman and who is the CEO of that company, (vi) a graph of five year dividend payment for each company and (vii) next dividend date. Using ASX and ASIC websites for the fact finding. Your group is not allowed to choose the cases I have used as examples in this assignment instruction.
  • Example: Commonwealth Bank is a commercial bank, which is categorized in the group of Authorized Deposit-taking Institutions (ADIs) in Australia. Commonwealth Bank operates 
    in banking market sector. Its key business is taking deposit from individuals as well as businesses, and then lend those pooled savings to other individuals and businesses. Its main source of income . 


Trimester T1 2020

Unit Code HI5002

Unit Title Finance for Business

Assessment Title Research on Financial market and Capital Budgeting Analysis


In this report, the knowledge of activities of Australian Stock Exchange (ASX) is given by the analyst. ASX is consider in one of the world’s leading financial market exchanges. According to the list provided at ASX, under the Australian stock exchange 2133 companies are listed. Australia’s primary stock market index is S&P/ASX 200(XJO). In the ASX listed stocks, this index is compromised of the 200 largest ASX. 

In this report, the analyst distinguished between commercial banks, insurance companies, investment banks and investment funds in Australia. The comparison is done on the basis of different perspectives which includes the group of financial institutes it belongs to, the market sector of operation, the main source of income and key business activities. In this report, examples are also given for better understanding of different institutes. 

In the second portion of this report, the knowledge of capital budgeting, capital structure and working capital management is provided by the analyst. Under this report, it is mentioned that the facts for listing of the company on ASX such as to improve the profit margin, criteria that the organization must have to follow, and how the listing is benefited for the company. 

In the case of financial advisor, the analyst gives information which includes who can become financial advisors, in Australia how financial advisory registration is performed, the financial register’s function, and the financial advisor’s working, financial product on which advice is provided by financial advisor according to the market research. This reports also includes information on cash flow analysis on the project in the given case. In this report, the analyst analysed and understood all the information.

Part 1: Research and fact-finding of Australian financial market

Comparison of four key financial institutions:

In Australia, from the perspective of a potential investor there are four major financial institutes.

Comparison between these four financial institutes are given below:

Banks which deals with business activities directly with the public are known as commercial banks.
These type of institute deals with accepts deposits, offer checking accounts service, offers basic financial products and make various loans.
Ax profit seeking institutes, as its name suggest that this institute is established to earn profit (Australian Security market, (2020)..
The institutes that gives various insurance to individual or business agencies by paying regular fee i.e. premium, those institutes are known as insurance companies.
It is divided into profit organization and non-profit organization.
An insurance companies operates its business by pooling risk among large number of policyholder (Australian Security market, (2020).The premiums are depends upon the probability of occurring that particular events and the average financial loss associated with each.

The institutes that is based for performing the role of intermediary for a variety of service, these institutions are known as investment banks.
Most of investment banks are specialized in huge and complex financial transaction between the public investing and securities issuers. 
The role of investment banks start with pre-underwriting counselling and continues to give advice as the distribution of securities. 

The institutes that is emerging in the supply of capital belonging to various investors which they used to purchase of stock and securities collectively, these institutes are known as investment funds.
Each investor has its ownership and control of stock and securities.

2.Market sector of operationThey deals with retails and commercial sectors.They deals with individual insurance and business insurance.They basically deals with business investments.They deals with market area of investments.
3.Key business activities
In the form of savings, current and fixed deposits, they accept deposits (Corporate governance regulation, 2019).
They give loan and collect interest from entrepreneurs.
They give facilities to individual and business enterprises of discounting of bill of exchange, lockers, overdraft, purchase and sales of securities as per their requirements.
They provide life insurance, health insurance, accident insurance, business insurance if they face any uncertain circumstances.
First of all, they rise capital and gives security underwriting to companies.
Emerged in manage the wealth of their clients.
Facilitate research service to their client.
Performs financial statement analysis, financial forecasting, and financial modelling. 
They give facilities to public offering of equity and debt securities.
Emerged in managing client’s wealth, risk management and placement in all securities.
4.Main source of income
By difference in the earned interest and paid interest.
By non-commercial activities like locker rent.
By taking premium for various insurance from customers.By taking fees for facilitating various service to their clients. 
By charging on purchase and sales of several securities.
By taking fees for different services.
By taking commission on trade.
5. Examples 
First listed: 1969
Current market capitalization: 43.65bn
Dividend yield: 10.4% (Australian Security market, (2020).   
First listed: 2005
Current market capitalization: 941.93m
Dividend yield: 3.68%   
First listed: 2015
Current market capitalization: 168.63m
Dividend yield: 9.16% (Australian Security market, (2020).  
First Listed: 2014
Current Market Capitalization: 47.48 m
Dividend Yield: 8.15%

Analysis of three financial management question

Capital budgeting: The process which is used to evaluate potential major projects or investments by business entrepreneurs is called as capital budgeting. With the help of this process, a company assessed the lifetime of cash inflow and outflow of project. Also used to analyse the potential of project to generated sufficient target benchmark (Australian Security market, (2020).

For example: Oil and gas supermajor Exxon Mobile Crop. Cuts it capital budgeting by 30% in 2020, by collapsing demand in order to low energy prices. Exxon stated that to survive in this downturn, they also cut its cash flow expenses by 15% (Australian Prudential Regulation Authority (APRA) (2020).

Capital structure: The process which is used to finance overall growth and operations by the company by combining the debt and equity is called as capital structure. Debenture issues or loans are debt whereas preference share, common stock, retained earning are equity. In quantitative term, capital structure is defined as debt-equity ratio that means ration of shareholder’s equity against debt. There are different capital structures for the companies it is divided into two types that are aggressive (high debt against equity) and conservation structure (low debt against equity) (Australian Security market, (2020).

For example: General electronics (GE) has retained its debt level over last 12 months by $134.59B. Here, the equity is lower than total debt level. Therefore, GE is considered in the company which have high leverage (Australian Security market, (2020).

Working capital management: This process is a business strategy which is used to make sure that the organization is efficiently operates its current liabilities and current assets. The primary purpose of working capital management is to maintain sufficient cash flow of the company and also enables its short-term debt obligation and operating costs. The term working capital is refers to the difference between current liabilities and current asset. If higher liquidity available with the company or no adequate utilization of funds that means higher working capital (Australian Security market, (2020). For example: In the time of corona virus pandemic, the eight largest banks of Australia decided to retain its capital by not purchasing back shares from the market. If bank buy the shares back then it will difficult to meet its operating cost.       

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