BCO224 Financial Markets Course Assignment

December 14, 2022

BCO224 Financial Markets Course Assignment

Order Number	636738393092
Type of Project	ESSAY
Writer Level	PHD VERIFIED
Format	APA
Academic Sources	10
Page Count	3-12 PAGES

Instructions/Descriptions

BCO224 Financial Markets Course Assignment

BCO224, Financial, Markets, Course, Assignment

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Description:

The assignment consists of 3 questions and 4 exercises
Concepts included are in UNIT 1 to 6
The final assignment will be accepted in WORD format ONLY. It is mandatory to submit an EXCEL file where you explain the different calculations you made. So, both files have to be submitted.
Calculation results HAVE TO be explained and the calculation steps explained

Assignment Launch: Week 10

Submission: Week 14 – Via Moodle (Turnitin). Submission will be accepted all Week 14: From the 11th to the 17th of May at 23:59hrs (Barcelona’s time).

Weight: This task is a 40% of your total grade for this subject.

Outcomes: This task assesses the following learning outcomes:

Demonstrate a deep understanding of the role of financial markets and financial institutions
Examine the financial instruments
Critically evaluate what interest rates mean and why interest rates change
Demonstrate understanding of bond prices and bond yields
Analyze stock price changes and demonstrate understanding of foreign exchange rates and its effect on businesses

QUESTIONS

Assume that the following banks have the same net amount of 2 million, but they are different due to the capital structure:

BANK A
Reserves	120	Deposits	850
Loans	900	Bank Capital	170
Total assets	1020	Total Liabilities and Equity	1020

BANK B
Reserves	120	Deposits	1000
Loans	900	Bank Capital	20
Total assets	1020	Total Liabilities and Equity	1020

Which Bank is more attractive for shareholders?
Which bank is riskier in case of loan depreciation at 20 million? Show your calculations to support your suggestions.
Could you define what is the yield curve?
What are the three main theories that attempt to explain the yield curve?
What does it mean an inverted yield curve? How does it compare to a normal yield curve?
Briefly explain what would happen and why:
Suppose that price levels in Indonesia rise by 20% relative to price levels in the Eurozone countries and that the purchasing power parity theory holds. How would this affect the value of the Indonesian rupiah relative to the euro?
If the British central bank prints money to reduce unemployment, what will happen to the value of the pound in the short run and the long run?
Due to increasing wealth, what would happen to the value of the Singapore dollar if Singaporeans significantly increased their consumption of foreign goods and services as compared to locally produced goods and services?

EXERCISES

Suppose there are two bonds you are considering:

	Bond A	Bond B
Maturity (years)	20	30
Annual Coupon rate (%)	12	8
Par Value	100	100

If both bonds had a required rate of return of 10%, what would the bonds’ prices be?
Re-calculate the prices of the bonds if the required return falls to 9%. Could you explain why the price increases or decreases given this change in required return?
Calculate the NAV of the following fund, assuming 3,500 shares are outstanding. Calculate the percentage change in the NAV of the fund if stock C climbs to $33.41.

Stock	Shares owned	price
A	500	$5.74
B	6,000	$65.10
C	3,000	$12.04
Cash	n.a.	$4,368.40

Will the NAV increase or decrease? Why?
Calculated your return on your investment given the change in NAV
Suppose the Swiss Franc is currently traded at SFR 1.40/$. The British Pound is traded at GBP 1.39/$. Ignoring transaction costs:
Determine the SFR/GBP exchange rate consistent with these direct quotations.
Suppose the SFR/GBP cross rate in the market was at SFR 1.05/GBP. Is there any arbitrage opportunity?
Consider the following three stocks:

Stock A is expected to provide a dividend of $10 a share forever
Stock B is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 4% a year forever.
Stock C is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 20% a year for 5 years (until year 6) and zero thereafter.

If the market capitalization rate for each stock is 10%, which stock is the most valuable?
What happens if the capitalization rate drops to 7%? Explain
Assume EPS for stock A is 5, Stock B 7, and Stock C 20. Calculate the P/E ratio for each. Briefly explain what the different values mean to you.

Rubrics

	Exceptional 90-100	Good 80-89	Fair 70-79	Marginal fail 60-69
Knowledge & Understanding (20%)	Student demonstrates excellent understanding of key concepts and uses vocabulary in an entirely appropriate manner.	Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant vocabulary.	Student understands the task and provides minimum theory and/or some use of vocabulary.	Student understands the task and attempts to answer the question but does not mention key concepts or uses minimum amount of relevant vocabulary.
Calculation (40%)	Student demonstrates excellent ability to calculate and understand all key formulas & exercises.	Student demonstrates good ability to calculate and understand all key formulas & exercises.	Student demonstrates fair ability to calculate and understand all key formulas & exercises.	Student demonstrates insufficient ability to calculate and understand all key formulas & exercises.
Analysis (30%)	Student demonstrates an excellent ability to interpret statistics and the calculation results, as well as a highly critic approach	Student demonstrates a good ability to interpret statistics and the calculation results, as well as a good critic approach	Student demonstrates a fair ability to interpret statistics and the calculation results, as well as a fair critic approach	Student demonstrates an insufficient ability to interpret statistics and the calculation results, as well as an insufficient critic approach
Communication (10%)	Student communicates their ideas extremely clearly and concisely, respecting word count, grammar and spellcheck.	Student communicates their ideas clearly and concisely, respecting word count, grammar and spellcheck.	Student communicates their ideas with some clarity and concision. It may be slightly over or under the wordcount limit. Some misspelling errors may be evident.	Student communicates their ideas in a somewhat unclear and unconcise way. Does not reach or does exceed wordcount excessively and misspelling errors are evident.

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BCO224 Financial Markets Course Assignment

RUBRIC

Excellent Quality

95-100%

Introduction

45-41 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Literature Support

91-84 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Methodology

58-53 points

With titles for each slide as well as bulleted sections to group relevant information as required, the content is well-organized. Excellent use of typeface, color, images, effects, and so on to improve readability and presenting content. The minimum length criterion of 10 slides/pages is reached.

Average Score

50-85%

40-38 points

More depth/information is required for the context and importance, otherwise the study detail will be unclear. There is no search history information supplied.

83-76 points

There is a review of important theoretical literature, however there is limited integration of research into problem-related ideas. The review is just partly focused and arranged. There is research that both supports and opposes. A summary of the material given is provided. The conclusion may or may not include a biblical integration.

52-49 points

The content is somewhat ordered, but there is no discernible organization. The use of typeface, color, graphics, effects, and so on may sometimes distract from the presenting substance. It is possible that the length criteria will not be reached.

Poor Quality

0-45%

37-1 points

The context and/or importance are lacking. There is no search history information supplied.

75-1 points

There has been an examination of relevant theoretical literature, but still no research concerning problem-related concepts has been synthesized. The review is just somewhat focused and organized. The provided overview of content does not include any supporting or opposing research. The conclusion has no scriptural references.

48-1 points

There is no logical or apparent organizational structure. There is no discernible logical sequence. The use of typeface, color, graphics, effects, and so on often detracts from the presenting substance. It is possible that the length criteria will not be reached.