MAF203 Business Finance – Trimester 2 Assessment Task 3 – Group Assignment

Image source: https://hbr.org/2021/10/5-things-high-performing-teams-do-differently
Assessment 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.
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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 another’s progress.
Bonding Over Non-Work Topics
Discussing non-work topics offers significant advantages because it’s 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 aren’t 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.
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a. Description of the task
This assessment task is designed to assess your skills on:
(1) analysing information from a company’s annual report
(2) calculating and interpreting a company’s or a portfolio’s risk and return
(3) valuing a company using a discounted dividend valuation technique
(4) valuing a company using a market-based valuation technique, and
(5) assessing whether a company’s 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)
1. 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)
2. 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)
3. 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:
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ASX Code
Company/Index Name
ANZ.AX
ANZ Group
^AORD
All Ordinary
(MKT)
index
1. Calculate annualised expected return and standard deviation of the stock and the index
given above. Keep two to three decimal points.
2. Calculate the correlation between the stock and the index.
3. Calculate the beta of ANZ Group. How would you interpret the beta of ANZ Group?
4. Which of the risks identified in ANZ’s annual review (pages 54 and 55) will affect its beta?
Which of the risks identified there will affect ANZ’s unsystematic risks? Explain clearly.
5. 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
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Weight of
^AORD
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
Portfolio
risk
Portfolio
Return
6. Calculate the excess portfolio expected return per unit of risk1 for each combination of
weights. The excess portfolio expected return is the difference between the portfolio’s
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.
7. Which combination maximises excess portfolio expected return per unit of risk? What is
the economic interpretation for this combination?
8. Calculate the expected return of ANZ’s share using the Capital Asset Pricing Model.
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The excess portfolio expected return per unit of risk is also called the Sharpe ratio.
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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
ANZ’s 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 Share Price End of
outstanding
Period 2021
NAB
CBA
Westpac
ASX
Magellan
Financial
QBE Insurance
NAB.AX
CBA.AX
WBC.AX
ASX.AX
MFG.AX
$ 6,810 million
$ 9,830 million
3,180 million
$ 5,290 million
3,500 million
$ 489.4 million
193.6 million
$314.5 million
185.1 million
$27.13
$93.74
$20.30
$83.19
$18.61
QBE.AX
$ 700 million
1,480 million
$11.13
ANZ Group
ANZ.AX
$6,760 million
2,800 million
$26.53
1,700 million
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 ANZ’s 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.
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4. Provide your group’s conclusion on whether ANZ’s share is overvalued or undervalued. Explain your
answer clearly.
b. 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:
–
o
Title page: With group number, student names, and student IDs for all members
o
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.
o
References: Use Harvard referencing style
o
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.
c. 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:
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Unit Learning Outcome (ULO)
Graduate Learning Outcome (GLO)
ULO 1: Comprehend the conceptual foundation for financial GLO1: Discipline-specific knowledge
decision-making in a typical business firm.
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 GLO1: Discipline-specific knowledge
shares, short-term and long term investment and financing and capabilities
decisions and working capital management.
GLO4: Critical thinking
GLO5: Problem Solving
d. 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:
Purchase answer to see full
attachment