MAF203 Business Finance Trimester 2 2022
MAF203 Business Finance Trimester 2 2022
Assessment Task 3 Group Assignment
DUE DATE AND TIME:15 September 2022 by 8:00PM AEDT
PERCENTAGE OF FINAL GRADE:30%
WORD COUNT LIMIT:3000 words
Image source: https://hbr.org/2021/10/5-things-high-performing-teams-do-differentlyAssessment 3 is a group assignment. Each group should have 3 or 4 members. Before I describe the assessment task, I would like to highlight the advantages of group work and what is required to do group work effectively.
Advantages of Group work
Group assignments can help you develop many essential skills necessary in professional life. There are many advantages of solving problems in teams. I will highlight a few here. Group assessments help you develop skills specific to collaborative efforts. In addition, group work allows teams to solve problems that are difficult to solve individually. You can delegate roles and responsibilities to others (if you are the group leader and share diverse perspectives. You can pool the knowledge and skills of others to solve assignment problems. Group assignments provide you with the opportunity to receive social support and encouragement to take risks. All the above skills are essential in the professional world.
What is required to do group work effectively?
I have summarised a few qualities that are highlighted in the Harvard Business Review article (https://hbr.org/2021/10/5-things-high-performing-teams-do-differently)
Frequent Communications
High-performing teams tend to communicate more. Frequent communications strengthen relationships and prevent misunderstanding, contributing to more fruitful interactions among group members.
Strategic with their meetings
High-performing teams are more likely to do prework for the meeting. There is an agenda for the meeting, and team members update on one anothers progress.
Bonding Over Non-Work Topics
Discussing non-work topics offers significant advantages because its in personal conversations that we identify shared interests, which fosters more profound liking and authentic connections. Topics may include sports, books, and family. The best teams arent more effective because they work all the time but because they connect in genuine ways, which yields closer friendships and better teamwork later.
Give and receive appreciation more frequently
High performing team members feel valued, appreciated, and respected by each other throughout the work because recognition is often a more powerful motivating force than other incentives.
Description of the task
This assessment task is designed to assess your skills on:
analysing information from a companys annual report
calculating and interpreting a companys or a portfolios risk and return
valuing a company using a discounted dividend valuation technique
valuing a company using a market-based valuation technique, and
assessing whether a companys share price is overvalued or undervalued
Since this is a group assignment, it is expected that you will solve the assigned problems in groups. Please note that not all parts are equal. For example, Part 5 critically analyses parts 1, 2, 3, and 4 and forms a conclusion. Therefore, it is essential to solving this assignment in the group. This is important because every group member should achieve the set-out unit learning outcomes for this task. It is also important because all unit learning outcomes will be assessed in the final exam.
The task is framed as a series of requests that a finance manager might request of your team, expecting that you will provide them with a series of clear recommendations supported by accurate and substantiated calculations.
Task Requirements:
This assessment task has five parts, and you must complete ALL questions. Use Excel for numerical calculations.
Part 1 About the Company (25 marks) (up to 600 words)
Download the 2021 Corporate Governance Statement of ANZ group from the unit site. Carefully study the board of directors of the firm. Evaluate the effectiveness of the board. Explain your answer clearly. What is the advantage of having an effective board? (15 marks)
Based on the 2021 annual review (which is an abbreviated version of the annual report), what steps has ANZ Group undertaken to minimise its environmental impact? In your view, what other actions could ANZ Group take to minimise its environmental effects further? (5 marks)
What support did ANZ Group provide to its customers in response to the COVID-19 pandemic? In your opinion, is this support enough, or should ANZ Group do more to help its customers further? (5 marks)
Part 2 Assessing risk and return (25 marks) (up to 600 words)
You are required to form a two-asset portfolio from the stock and the index shown below. The data is provided under the assessment folder on the unit site. For the portfolio, answer the following questions:
ASX Code Company/Index Name
ANZ.AX ANZ Group
^AORD All Ordinary index (MKT)
Calculate annualised expected return and standard deviation of the stock and the index given above. Keep two to three decimal points.
Calculate the correlation between the stock and the index.
Calculate the beta of ANZ Group. How would you interpret the beta of ANZ Group?
Which of the risks identified in ANZs annual review (pages 54 and 55) will affect its beta? Which of the risks identified there will affect ANZs unsystematic risks? Explain clearly.
Calculate the expected return and standard deviation of the portfolio constructed from the stock and the index using the weights below. Use the annualised expected return and standard deviation calculated in Part 2 Q (1) to calculate expected portfolio return and risk for the below questions wherever appropriate.
Weight of ANZ.AX Weight of ^AORD Portfolio risk Portfolio Return
0.0 1.0 0.1 0.9 0.2 0.8 0.3 0.7 0.4 0.6 0.5 0.5 0.6 0.4 0.7 0.3 0.8 0.2 0.9 0.1 1.0 0.0 Calculate the excess portfolio expected return per unit of risk for each combination of weights. The excess portfolio expected return is the difference between the portfolios expected return and the risk-free rate. Assume the risk-free rate is 3.5%, which is the current 10-year Australian government bond coupon rate. Explain your answer clearly and show your workings.
Which combination maximises excess portfolio expected return per unit of risk? What is the economic interpretation for this combination?
Calculate the expected return of ANZs share using the Capital Asset Pricing Model.
Part 3 ANZ Valuation based on the Discounted Dividend Model (20 marks) (up to 600 words)
Please download the excel spreadsheet from the unit website which shows the dividend history of ANZ Group from 2012 to 2021.
Calculate the intrinsic (theoretical) share price for ANZ based on the two-stage variable growth model. Need to show the steps of your calculations. How do you make the assumptions regarding the key parameters?
Hint: Part 2 of this assessment can provide some of the input(s) required to estimate the value of ANZs share.
Part 4 Relative Valuation (15 marks) (up to 600 words)
The following table shows the relevant statistics for several firms in the banking and financial sector in Australia. Calculate the share price of ANZ Group using the relative valuation approach based on the data below.
ASX code Earnings Number of shares outstanding Share Price End of Period 2021
NAB NAB.AX $ 6,810 million 3,180 million $27.13
CBA CBA.AX $ 9,830 million 1,700 million $93.74
Westpac WBC.AX $ 5,290 million 3,500 million $20.30
ASX ASX.AX $ 489.4 million 193.6 million $83.19
Magellan Financial MFG.AX $314.5 million 185.1 million $18.61
QBE Insurance QBE.AX $ 700 million 1,480 million $11.13
ANZ Group ANZ.AX $6,760 million 2,800 million $26.53
Part 5 Is ANZ Group overvalued or undervalued? (15 marks) (up to 600 words)
1. In Part 2 Q (1), your group calculated the expected return of ANZ shares using daily stock price data. In Part 2 Q (8), your group calculated the expected return of ANZ shares using the capital asset pricing model. Based on this comparison, is ANZs share overvalued or undervalued? Explain clearly.
2. In Part 3 Q (2), your group calculated the share price of ANZ using the dividend discount model. The share price of ANZ at the end of 2021 was $26.53. Based on the above information, is ANZ overvalued or undervalued? Explain clearly.
3. In Part 4, your group calculated the share price of ANZ using the relative valuation model. The share price of ANZ at the end of 2021 was $26.53. Based on the above information, is ANZ overvalued or undervalued? Explain clearly.
4. Provide your groups conclusion on whether ANZs share is overvalued or undervalued. Explain your answer clearly.
Specific Requirements
Your Assignment submission must contain the following:
Write complete sentences when you are explaining your answers.
Upload one Excel file to the MAF203 assignment Dropbox with all the workings for relevant parts. This submission is necessary to check your calculation in the assignment.
Word or .pdf file with all the workings (and relevant snapshots from your Excel file) for all parts should be uploaded for your group to the MAF203 assignment Dropbox, including:
Title page: With group number, student names, and student IDs for all members
Body/Content: All responses should be structured and numbered. All quantitative calculations should show your calculation steps, explained as required. You must explain which formula you are using to work out the question and copy and paste the important output of the Excel spreadsheet to the body of your Word document.
References: Use Harvard referencing style
Aspects not required: Executive summary, Introduction, and Conclusion.
The assignment weighs 30% of your overall mark for the unit. The assignment allocates 100 marks across all parts. Your group mark will be converted to a score out of 30. All members of the group will receive the same mark.
Learning Outcomes
This task allows you to demonstrate achievement towards the unit learning outcomes. The ULOs are aligned with specific graduate learning outcomes that is, the skills and knowledge that graduates are expected to have upon completing their studies and this assessment task is an essential tool in determining assurance of learning.
If you do not demonstrate achievement of the unit learning outcomes, you will not be successful in this unit. It is good practice to familiarise yourself with the ULOs and GLOs as they guide the knowledge, understanding, and skills you are expected to demonstrate upon completing the unit. In this way, they can be used to guide your study.
The learning outcomes assessed in this task are:
Unit Learning Outcome (ULO) Graduate Learning Outcome (GLO)
ULO 1: Comprehend the conceptual foundation for financial decision-making in a typical business firm. GLO1: Discipline-specific knowledge and capabilities
ULO 2: Evaluate risk-return trade-off in firm's financial decisions GLO1: Discipline-specific knowledge and capabilities
GLO4: Critical thinking
ULO 3: Apply relevant analytical techniques for valuing bonds and shares, short-term and long term investment and financing decisions and working capital management. GLO1: Discipline-specific knowledge and capabilities
GLO4: Critical thinking
GLO5: Problem Solving
Submission
It is the responsibility of all group members to read the whole assignment before submitting it. This is to maximise your chance to get a good grade on the assignment. You must finish your assignment well before the due date. You should be able to complete this assignment by the end of week 6, and the assignment is due in week 9. If you finish it on time, there is enough time for everyone to read the complete assignment and fix any errors.
Submit your assignment in the Assignment Dropbox in the MAF203 CloudDeakin unit site on or before the due date.
When uploading your assignment, name your word document and excel spreadsheet using the following syntax: <your group number_your Deakin student ID number_[MAF203].doc (or .docx); : <your group number_your Deakin student ID number_[MAF203].xls (or .xlsx). For example, Group_XXX_123456789_ABC123.doc.
Only one group member should submit the assignment on CloudDeakin on behalf of the entire group. Assignments sent as an email attachment or by mail will not be accepted under any circumstances.
Submitting a hard copy of this assignment is not required.
You must keep a backup copy of every assignment you submituntil the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced,you will need to submit your backup copy.
Any work you submit may be checked electronically or by other means to detect collusion and plagiarism.
When you submit an assignment through your CloudDeakin unit site,you will receive an email confirming that it has been submitted to your Deakin email address.You should check that you can see your assignment in the Submissions view of the Assignment Dropbox folder after upload,and check for,and keep,the email receipt for the submission.
Marking and feedback
The marking rubric for this task will be available in the MAF203 CloudDeakin unit site - in the Assessment folder (under Assessment Resources).
It is always a valuable exercise to familiarise yourself with the rubric before completing an assessment task. Rubrics act as a boundary around the task and help identify what assessors are looking for specifically in your submission. The standards are drawn from the units learning outcomes ensuring they align with appropriate graduate attribute/s.
Identifying the standard you aim to achieve is also a valuable strategy for success, and to that end, familiarising yourself with the descriptor for that standard is highly recommended.
Students who submit their work by the due date will receive their marks and feedback on CloudDeakin 15 working days after the submission deadline.
Extensions
Follow the Assignment Extension policy that you have received from the Faculty. This term, the evaluation of the extension request will be done by a specialist, not the unit chair.
Referencing
Any material used in this assignment that is not your original work must be acknowledged as such and appropriately referenced. You can find information about plagiarism and other study support resources at the following website:
http://www.deakin.edu.au/students/study-support
