Assessment Tasks on Financial Performance and Investment Decisions During COVID-19 Pandemic

Learning Outcomes:

1. Critically analyse goals of financial management within an organisation and explain how a good corporate governance underpins pursuance of such goals.
   
   
2. Analyse financial information and evaluate financial performance of a business.
   
   
3. Apply time value of money to the valuation of a variety of cash flows, securities and projects leading to sound investment and financing decisions.
   
   
4. Analyse risk and return associated with investments.

Task Summary

Students are expected to utilise publicly available financial market information, evaluate financial performance of selected organisations listed on the Australian Securities Exchange and apply the theory of time value of money, risk and return when making investment decisions. Students are expected to prepare 10 -15 ppt slides and record a 15 minutes presentation addressing the assessment tasks.

Context:

The World Health Organisation (WHO) categorised the COVID-19 situation as a pandemic on the 11th of March 2020. This announcement induced a lot of panic in many countries with panic buying of major household items and medicines escalating. In order to minimise the spread of the virus, airlines have cut down international flights and travel bans have been implemented, with some countries closing borders completely.

Economists and governments foresee grave effects on global economies as a result. The financial markets have not been spared. They can be seen as barometers of investor sentiment and give an indicator of how the market participants could be evaluating the impact of the COVID-19 pandemic on viabilities of companies. It is important for existing and prospective investors to have information on how financial markets have been impacted.

The onset of the COVID-19 pandemic, which has become a global pandemic, is projected to adversely affect economies globally and could result in most companies showing poor financial performance and equity investors registering low or negative returns. This assessment aims at:

• Testing the students understanding of the concepts of risk and return and their ability to evaluate how the stock markets and stocks (shares) have been affected by the emergence of the coronavirus pandemic.
  
  
• Assessing students’ ability to evaluate the effect of the coronavirus on the bond markets in two countries in Asia Pacific, i.e. Australia and another.
  
  
• Assessing students’s ability to prepare and make a professional business presentation.

Assessment Tasks:

You are expected to consider Australia and any other country from the Asia Pacific region given in the following table. Your facilitator will assign to you one of the following countries.

Task 1

For the period 31 August 2019 to 31 March 2020, collect daily values of the main shares market index of the countries chosen (i.e. Australia and any other from the table above) and share prices of the five top companies by market capitalisation that are listed on the country’s main security exchange.

Calculate the daily returns on the shares and index, and identify which shares over or under performed the index during the period in question. Provide a possible explanation of why some shares underperformed or over performed the index. (15 Marks)

Task 2

Construct a portfolio comprising of the top 5 companies by market capitalisation listed on the Australian Securities Exchange and another portfolio of the top 5 companies by market capitalisation in the country chosen.

Assume you are investing an equal proportion in each share. Based on the historical data you collected, calculate the mean return, standard deviation and beta of the two portfolios. (15 Marks)

Task 3

On the basis of the calculation you have done, determine which of the two portfolios you would choose to invest in, the $10 million you have just inherited. Consider the issues of risk and return and assume you are a risk averse investor. (7.5 Marks)

Task 4

With supporting evidence, discuss how the COVID- 19 pandemic has affected bond markets in Australia and in the other country you are analysing. (7.5 Marks)

Instructions:

• Prepare a minimum of 10 slides (maximum 12 slides) to be presented in 15 minutes addressing all assessment tasks.
  
  
• Record a 15-minute video in which the presenter’s face is seen. You are recommended to use zoom and if not available, you can use any other recording platform.
  
  
• The slides are to be submitted via Blackboard. You should also submit the EXCEL document with your calculations.
  
  
• Remember to cite the sources of information used. Include the list of references in the last slide of your presentation
  
  
• Students will be assessed on how well they address the assessment tasks, how well they demonstrate the knowledge of risk and return, bonds and shares . Ability to apply the knowledge to making a sound investment decision will also be evaluated.
  
  
• The quality of the presentation will be crucial component of determining the final mark. Please refer to the learning rubric for more details.