files.transtutors.com file · web viewthis assessment covers the fundamentals of investment theory...

DFP Module 2 Workplace Simulation1703

Diploma of Financial Planning

Module 2 Workplace Simulation

Submission Instructions:Key steps that must be followed:

Please complete the Declaration of Authenticity at the bottom of this page.

Once you have completed all parts of the assessment and saved it (e.g. to your

desktop computer), login to the Monarch Learning Management System (LMS) to

submit your assessment.

In the LMS, click on the file ”Submit DFP Module 2 workplace simulation” in the

Module 2 section of your course and upload your assessment file/s by following

the prompts.

Please be sure to click “Continue” after clicking “submit”. This ensures your

assessor receives notification – very important!

Declaration of Authenticity*

I certify that the attached material is my original work. No other person’s work has been used without due acknowledgement. I understand that the work submitted may be reproduced and/or communicated for the purposeof detecting plagiarism.

Student Name*: Date:

* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by the above student declaration.


Units: FNSINC401, FNSINC501, FNSASICT503, FNSASICW503, FNSASICV503, FNSFMK502, FNSFMK503, BSBITU402, FNSFPL506

Important assessment information Aims of this assessment

This assessment covers the fundamentals of investment theory and application.

Research of specific ASX listed shares is required focussing on extracting key data points

such as share price, volume, market capitalisation, and PE multiples. The preparation of

performance data is covered, as is comparing individual performance against

benchmark indices using industry based research approaches. The use of Excel

spreadsheets to sort performance data to make decisions is explored. Comparing

investor risk profiles including an investor’s underlying investments against their life

stage is also covered. Rebalancing using strategic asset allocation decision making is

addressed. Different fund manager styles are explored, using industry focussed research

methods to compare and contrast their relative performance over time. Derivatives are

explored with a focus on options strategies including both European and American

options.

Marking and feedback

This assignment contains 4 assessment activities each containing specific instructions.

This particular assessment forms part of your overall assessment for the following units

of competency:

FNSINC401

FNSINC501

FNSASICT503

FNSASICW503

FNSASICV503

FNSFMK502

FNSFMK503

BSBITU402

FNSFPL506

Grading for this assessment will be deemed “competent” or “not-yet-competent” in line

with specified educational standards under the Australian Qualifications Framework.

What does “competent” mean?




These answers contain relevant and accurate information in response to the question/s

with limited serious errors in fact or application. If incorrect information is contained in

an answer, it must be fundamentally outweighed by the accurate information provided.

This will be assessed against a marking guide provided to assessors for their

determination.

What does “not-yet-competent” mean?

This occurs when an assessment does not meet the marking guide standards provided

to assessors. These answers either do not address the question specifically, or are

wrong from a legislative perspective, or are incorrectly applied. Answers that omit to

provide a response to any significant issue (where multiple issues must be addressed in

a question) may also be deemed not-yet-competent. Answers that have faulty

reasoning, a poor standard of expression or include plagiarism may also be deemed not-

yet-competent. Please note, additional information regarding Monarch’s plagiarism

policy is contained in the Student Information Guide which can be found here:

http://www.monarch.edu.au/student-info/

What happens if you are deemed not-yet-competent?

In the event you do not achieve competency by your assessor on this assessment, you

will be given one more opportunity to re-submit the assessment after consultation with

your Trainer/ Assessor. You will know your assessment is deemed ‘not-yet-competent’ if

your grade book in the Monarch LMS says “NYC” after you have received an email from

your assessor advising your assessment has been graded.

Important: It is your responsibility to ensure your assessment resubmission addresses all

areas deemed unsatisfactory by your assessor. Please note, if you are still unsuccessful

in meeting competency after resubmitting your assessment, you will be required to

repeat those units.

In the event that you have concerns about the assessment decision then you can refer

to our Complaints & Appeals process also contained within the Student Information

Guide.

Expectations from your assessor when answering different types of assessment

questions

Knowledge based questions:

A knowledge based question requires you to clearly identify and cover the key subject

matter areas raised in the question in full as part of the response.

http://www.monarch.edu.au/student-info/




Skill based questions:

Where you are asked to write as though you are speaking to a client, your answers must

show your ability to:

understand your client’s concerns/perspective/views

show empathy

display a professional response

explain ideas clearly and simply so your client can understand the issues

Good luck

Finally, good luck with your learning and assessments and remember your trainers are

here to assist you




Assessment Activity 1

Research Project

Yahoo Finance – CBA

Activity instructions to candidates

This is an open book assessment activity. You are required to read this assessment and answer all 10 questions that follow. Please type your answers in the spaces provided. Please ensure you have read “Important assessment information” at the front of this

assessment Estimated time for completion of this assessment activity: 4 hours




Background

Belinda and James have a self-managed super fund. They are thinking of purchasing some Commonwealth Bank shares (CBA) to include in their super fund. Belinda and James emailed you asking if you can provide some information on CBA so they can make a decision as to whether or not they will go ahead with the purchase of the CBA shares. You agree to conduct some research and provide answers to their questions in readiness for your meeting with them scheduled for next Monday.

Note: In many instances your dealer group (or licensee) can provide you with access to research houses such as Lonsec, Morningstar etc where this information can be found easily. However, clients don’t have access to this, so if you know how to access public information, you can always show clients how to do it themselves.

Your task:

Use au.finance.yahoo.com to access the information your clients require about CBA shares.

We have provided you with step by step instructions about how to use finance.yahoo.com to access this information. The instructions relate to Woolworths but you are required to follow the same steps to access information about CBA.

Please save all parts to this assessment activity and upload these to the LMS when submitting your assignment for grading.




Required:

Follow the detailed instructions provided at the end of this assessment activity in order to complete the following tasks:

1. Prepare the summary screen for CBA that shows information about CBA’s Last Trade, Change in Price, Bid, Ask, Volume, Market Capitalisation, and P/E ratio. Copy the screenshot such as using the Print Screen (PrtSc) function on your keyboard and paste it below:

2. Prepare the 3 key financial statements. Copy the screenshots for each of the three key financial statements such as using the Print Screen (PrtSc) function on your keyboard and paste it below:

3. Prepare a line graph of CBA share prices over the last 2 years. Copy the screenshot of the graph such as using the Print Screen (PrtSc) function on your keyboard and paste it below:

4. Compare CBA’s share price performance with that of Westpac (WBC.AX) over the past 5 years. Copy the screenshot of the graph such as using the Print Screen (PrtSc) function on your keyboard and paste it below:

5. Download all available CBA monthly share prices starting from 1 Jan 2012 and save the data as an excel file. Save the excel file.




6. Using the Data tab in excel, sort the data by the column containing Adjusted Closing Prices. (Make sure you highlight the whole data set before you sort, otherwise only the Adjusted Closing Prices will get sorted and the remaining columns will not match up.) What date was CBA’s lowest Adjusted Closing Price? Type your answer in the box below.

7. What date was CBA’s highest Adjusted Closing Price? Type your answer in the box below.

8. Prepare the Analyst’s Opinion for CBA, showing the Recommendation trends and the Recommendation rating. Copy the screenshot such as using the Print Screen (PrtSc) function on your keyboard and paste it below:

9. Three months ago what was the recommendation of analysts for CBA - did most analysts suggest CBA was a buy or sell or a hold? Type your answer in the box below.

10. This month, what is the recommendation of analysts for CBA? - did most analysts suggest CBA was a buy or sell or a hold? Type your answer in the box below.




Instructions for Research Project: Yahoo Finance

These instructions show you how to access:

financial statements

charts showing share price history

an excel spreadsheet showing share prices and trades volume over time

analysts’ comments

Please use the following instructions to complete this project for CBA. (These instructions access data for Woolworths. You are required to follow the same instructions but access data for CBA.)

1. INTRODUCTION

1. Go to the homepage by entering au.finance.yahoo.com

2. On the homepage enter the firm’s name in the Quote Lookup box which is on the right hand side of the screen. Enter the code WOW for Woolworth’s and you will be given a list. For shares on the Australian stock market, the code will be followed by .AX.

3. When we select WOW.AX the Summary for the share will appear.




The bar below the price shows different tabs with information about the share that has been selected .

The summary shows the current pricing of the share.

The statistics tab shows details of valuation measures and trading information

From the financials tab, you can access the 3 types of financial statements for the last 4 periods.

The historical data displays historical prices and dividends.

2. FINANCIAL STATEMENTS

To obtain any of the 3 key Financial Statements just select the Financials tab and click the name of the one

that you want.




3. CHARTS

On the Summary tab, if we click on the for WOW we obtain a graph of the actual share prices along with the trading volumes for these shares below it.

There are several options with this chart

Range: This varies from one day (1d) to the whole period for which we have data (max)

Area: We can have Bar, Line (as in this case) or Candle (where the length of the candles show the daily price range and the colour shows whether prices moved up or down that day).

Settings: We can show the actual values (Linear) or the Log values. Typically we use Log values when we are interested in growth rates because the slope of the line graph of log values is equal to the growth rate of the values of the share prices.




We can also compare the Woolworth’s share prices to other values such as the S&P500, NASDAQ and Dow Jones, price indices. In the chart on the next page we see that this will give us the graphs of

thepercentage changes in the initial price or index value over the initial level. To compare WOW prices

with the Dow index we select and choose the symbol we want




We can also compare our selected share with other shares by entering their 3 letter code in the Compare symbol box.

4. DOWNLOADING SHARE PRICES AND VOLUMES

Suppose we go to the main quote page and click Historical data. Here we see that we can choose between Daily, Weekly and monthly frequencies for WOW prices and trading volumes. We will start with the Weekly prices which are shown below. As you can see Yahoo Finance always starts with the value for the most recent date and then shows the values from earlier periods.

Or, we can choose to show dividends only. Each time you change your selection criteria you should click the Apply button to refresh the screen.




We can also download the data by selecting which is beneath the Apply button. This will download your data selection as a .csv file.

Using Excel on your computer, open this csv file. It contains a worksheet called table in which there are the following 7 columns:

Date contains the dates starting at the most recent one

Open, High, Low, Close & Adj Close contain the Opening, High, Low, Closing, and Adjusted Closing Prices for each week

Volume contains the Average of the Trading Volumes for the 5 days in that week

Save this file as a standard Excel file (rather than as a csv file)

To arrange these values starting with the earliest rather than with the most recent we highlight all 7 columns and click

Data / Sort

The Sort dialog box will now appear. In the Sort by box click Date, then in the Order box click Oldest to Newest. You will have the worksheet shown below. You should now save this sorted Excel file to your computer.




5. LOOKING AT ANALYSTS COMMENTS ON WOW

If we click on the Analysts tab and scroll down, on the right hand side we can see the recommendation trends and the recommendation rating. For the month of December most analysts believe that Woolworths is underperforming.





Case Study

Investment Fund Comparison



assessment Estimated time for completion of this assessment activity: 1 hour




Background

Below are details of the Finn family:

Assets: Liabilities:

Family home $290,000 Credit card debt $2,000

Car 35,000 Mortgage 15,000

Contents 50,000

Bank deposits 45,000

Debentures 75,000

Managed funds - balanced 40,000

Superannuation funds 420,000

Income:

Gross salaries of Mr and Mrs Finn are $50,000 (tax of $8,550) and $20,700 (tax of $2,205)

Expenditure:

$30,000 per annum - including $10,000 per annum mortgage repayments, and a commitment to repay the credit card debt over the next twelve months.

Required:

1. Describe what stage of life you think the Finn family is at and why you think so. Hint, look at the size of superannuation and their mortgage.

2. Mr and Mrs Finn believe that their risk profile is balanced. Describe what investment characteristics you think a balanced investor may have.




3. Go to www.comparefunds.com.au to access research on balanced funds. Compare the following two funds: Note, APIR codes are used to identify a fund within the industry.

Colonial First State (First Choice) Balanced (APIR: FSF0254AU) Colonial First State Colliers Global Property Securities (APIR: FSF0666AU)

Answer the following questions:

a. Explain to Mr and Mrs Finn how these two funds differ, including the difference in management strategy?

b. Which fund has performed better over the 2015-2016 financial year?

c. How much income (as opposed to growth) did the funds produce during the 2015-2016 financial year?

http://www.comparefunds.com.au/





Calculation questions

Asset Allocation



assessment Estimated time for completion of this assessment activity: 1 hour




Background

Twelve months ago you established an investment portfolio for your clients Ken and Loretta. At the review next week, you are going to raise the issue again about the importance of maintaining their asset allocation so it is consistent with their risk profile and the investment strategy they both agreed on when the portfolio was first set up.

The original investment portfolio had $550,000 in a Cash Managed Fund and Equity Managed Fund, split 70% across the Cash Managed Fund and 30% across the Equity Managed Fund, in line with their target asset allocation. The Equity Managed fund contained some speculative shares that were of particular interest to Ken. Today, you are reviewing Ken and Loretta’s investment and the performance of both funds. The cash fund has returned 4.6% and the equity fund has returned a negative 4% in the previous 12 months. You want to re-balance Ken and Loretta's portfolio back to their target asset allocation of 12 months ago in line with Strategic Asset Allocation principles.

Required

a. Explain to Ken and Loretta why they should consider re-balancing their portfolio.

b. What is the value of their portfolio now? Show the amount in the Cash Managed Fund and the Equity Managed fund.




Assuming Ken and Loretta are comfortable re-balancing their portfolio and wish to proceed.

c. How much should be in the Cash Managed Fund?

d. How much should be in the Equity Managed Fund?

e. Which investment will be purchased and how much?

f. Which investment will be sold and how much?





Short answer questions

Derivatives



assessment Estimated time for completion of this assessment activity: 1-2 hours




Background

Gerald and Katie have worked very long hours on their farm for over 30 years. They have sold their farm and now have assets worth $3 million. Both Gerald and Katie are working in the city now but plan to retire in the next 5-7 years.

They seek your advice about an options strategy which involves buying 200 call option contracts with an exercise price of $20.00 per share in Mintmaker Ltd. One option contract = 100 shares. These options expire in 6 months. The current price of a Mintmaker share is $20.00. Gerald and Katie believe Mintmaker Ltd shares will increase dramatically as they are in the final stages of developing a new recycling technology which the government has expressed interest in.

The option premium is $0.10 per share. Gerald and Katie believe the Mintmaker Ltd price per share could increase to between $30.00 - $35.00.

You have already explained the risks associated with options strategies and Gerald and Katie ask you to clarify the financial consequences of such a strategy.

Required

Assume the options are American options and Mintmaker Ltd’s share price increases to $30 in 30 days’ time.

1) What are the alternative actions Gerald and Katie’s could take in 30 days’ time?

2) How would the alternative actions in question 1 change if the options were

European options?




3) What is the total cost of buying the call options today?

4) What is the cost of exercising the call options in 30 days’ time?

5) What actual gain or loss will they make if they exercise their options in 30 days’ time and the share price is $30?

6) What are the key risks associated with Gerald and Katie’s call option strategy?




NOTE TO STUDENT: Important: Please ensure that each of the documents listed below are submitted:

Workplace Simulation answers (with your name and date inserted). Activity 1 items re CBA research – summary screen, 3 key financial statements, line graph

over the last 2 years, chart comparing share price with WBC over the past 5 years as well as the analyst’s opinion. These documents may be provided by inserting print screens from the web pages into the assignment word document, Excel or PDF.

Activity 2 additional item re CBA research – Excel spreadsheet with CBA monthly share prices.

Thank you.

files.transtutors.com file · web viewthis assessment covers the fundamentals of investment theory...

Documents