FNCE3001: Introduction to Financial
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FNCE3001: Introduction to Financial
Instruments & Markets 2023 – Research Project
Research Project 2023
Financial Instruments and Markets
This project is worth 70 marks.
• Marks are allocated for presentation of assignment, analysis and written report.
• Any assumptions that you rely upon must be clearly stated in the written report. Do not just state something without developing an argument or discussion.
Total Marks: 70
Formatting requirements:
• Maximum of 10 sides of A4 (excluding tables, diagrams, references and appendices).
• Word limit 4000 Max, every 100 words over limit is penalized at 5% of total mark (excluding references and appendices).
• Font size ≥ 12; Font face is Times New Roman.
• Line-spacing 1.5 and minimum margin 2.54 cm in all 4 sides.
• Submission is via Turnitin
• Ensure you attach the assessment cover sheet as a front page to your assignment and the signed group cover form.
Learning outcomes associated with assignment:
This is a group research assignment.
You are expected to undertake research, analysis, take responsibility for your submission. Questions are linked – they are broken down into marks to assist you in structuring your answers and research.
1. Compare the types of equity securities that companies can use to raise equity capital and understand how share prices are determined.
2. Interpret international financial economic theories in relation to financial instruments and markets, including the effect on calculation of financial instrument prices
3. Ethics and behavioural finance
Group Project Cover Sheet – Introduction to Financial Instruments & Markets
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Name |
Student ID |
Contribution |
Signature |
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1 |
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1 |
2 |
3 |
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2 |
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1 |
2 |
3 |
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3 |
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1 |
2 |
3 |
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4 |
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1 |
2 |
3 |
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Comments: |
Contribution Key: (1) Did less than fair share, (2) Did fair share, (3) Did more than fair share. Recall that there is a 50% penalty if you did not contribute your fair share to completion of the project. Please use the comments section to note any comments you have on the way in which your team worked on the project, the structure of the project, and possible improvements for the project in future sessions.
Qn. |
Max. Mark |
Assessed Mark |
Part 1 |
15 |
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12 |
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Part 2 |
15 |
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10 |
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5 |
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Part 3 |
8 |
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Formatting |
5 |
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Marker’s Comments: |
Group Project Total 70 marks
Formatting [Total: 5 marks]
Five marks are allocated to the presentation of your assignment. For example, to receive full marks for your assignment you must adhere to the formatting requirements, provide well- presented and labelled charts (if appropriate) and include references
Question 1 [Total: 27 Marks]
CoStar Group (NASDAQ:CSGP) is a stock listed on NASDAQ exchange.
You will consider the time-period and daily share price of the company for the period 1st of February 2022 until 10th of March 2023.
Provide a bar or candlestick chart (or multiple charts) of the daily share price for the time period above. Identify at least three days, where news stories, events or issues related to the company have majorly impacted the share price. Evaluate and discuss the magnitude and direction of the price changes (opening to close) of the instances you have identified. Your answer should consider why the news/event/story impacted the share price in the manner that it did, as well as other considerations (e.g., theoretical, market, behavioural) besides the
identified news articles that you believe would have impacted the share price. (15 marks)
Next, use the chart created above and two technical analysis tools from learning module 4 to predict future stock price movements. What does your analysis indicate if you were an existing investor? (would you buy, sell or hold?). What does the usage of technical analysis
mean for the theory of market efficiency? (12 marks)
Question 2 - [Total: 30 Marks]
You have been considering investing in CoStar Group (NASDAQ:CSGP). You have decided to do a more thorough analysis of it.
i) Provide an industry and company analysis for CSGP (see supplementary resources on Blackboard). You should consider the factors which influence CSGP's share price (e.g. key competitors, peers, industry influences, company business, key financial ratios). (15 marks)
ii) Identify and discuss at least one benchmark that you have chosen to compare CSGP against. What considerations did you make in your choice of benchmark? Chart your choice of benchmark against CSGP's share price over the same period in Question 1 and compare the two graphically. (10 marks)
iii) Valuation multiples are often used to compare companies quickly. Identify an appropriate valuation multiple/ratio and evaluate if CSGP is over, under or fairly valued. Explain the reasoning behind your choice of multiple that you utilised for your analysis. Are there any limitations of utilising multiples that you might need to consider? (5 marks)
Question 3 – Ethics [Total 8 Marks]
a) Assume we are now in mid- April 2023. After conducting your own analysis, you have made a decision to buy shares of CSGP in May. However, your friend, Jaden who is a financial advisor for CSGP tells you that CSGP's earnings for the first quarter 2023 is higher than the analyst estimates. He suggests you to buy its shares immediately (i.e. in mid-April 2023) before this information is announced to the public (and price increases). Please state and explain which CFA Institute Code and Standards Jaden has breached. (4 marks)
b) John Smith, who is an equity analyst, owns $100,000 worth of CSGP stocks. John’s supervisor asks him to write an analyst report on CSGP. John’s wife thinks that accepting the task will cause John to violate the CFA Institute Code of Ethics and Standards of Professional Conduct. Thus, she wants John to reject the task. However, John does not want to reject the task. He thinks that he will not violate the CFA Institute Code and Standards as long as he bases his report on facts. What is your opinion on the issue? In deciding whether to accept the task, which CFA Institute Code and Standards should John consider? When you answer this question, please assume that John cannot sell his CSGP stocks. (4 marks)
2023-05-05
Financial Instruments and Markets