Financial market

FIN 335 Final Project Guidelines and Rubric

Overview

The final project for this course is the creation of a market analysis report. Whether you are a trader, a research analyst, or a portfolio manager, understanding how domestic and international markets behave and are regulated, along with the strengths and weaknesses of various financial instruments is key to determining where, how, when, and whether to invest. Such decisions, in turn, affect individual clients’ choices and collectively can influence how companies are valued and contribute to the overall economic climate. To help aid in the financial decision-making process, finance professionals often prepare a variety of market analyses geared toward clients and portfolio managers. For the summative assessment in this course, you will produce a market analysis report that analyzes various organized global and domestic exchange markets and compares and contrasts performance for different investment products. Your analysis report will give an overview of different markets available (including non-U.S. markets); discuss the factors that affect market performance (including interest, inflation, and other macroeconomic, social, and political factors); lay out relevant rules, regulations, and governing bodies for the different markets; analyze the performance of various instruments to assess risks and benefits; and draw conclusions based on your analysis. The project is divided into four milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Two, Three, Four and Five. The final submission will occur in Module Seven. In this assignment, you will demonstrate your mastery of the following course outcomes:

 Assess how macroeconomic forces affect domestic and global market performance for optimizing investment decisions

 Analyze interest rate movements and inflation during various economic periods for their effects on market returns and short- and long-term planning

 Compare and contrast the major financial investment instruments for estimating return-based dividends and capital gains

 Assess the likely risk and return to investors in diverse markets by analyzing common investment products and strategic business decisions

 Determine the relevant oversight bodies and laws governing specific markets for ensuring regulatory compliance

Prompt

Imagine you are a financial analyst at a major investment bank and will soon be working on a project involving a company going public. To help you prepare for this work and provide coaching for your continued career growth, your supervisor has asked you to choose a company that recently went public and analyze whether the company made a sound selection for its initial public offering (IPO), as well as other markets it could have considered. (Your instructor should approve your choice of company early in the course.) Specifically, your supervisor has requested that you prepare a market analysis report laying out the different markets (including non-U.S. markets); factors that might affect market performance; relevant rules, regulations, and governing bodies; and the risks and benefits associated with different financial instruments in different markets. Based on your analysis, you will assess whether the company you selected made a sound choice on which market to enter and why. You will also discuss the role different financial intermediaries played in helping the selected company achieve its goals and what that might suggest for the upcoming project. Specifically, the following critical elements must be addressed:

I. Market Overview. This section should provide an overview of the main organized exchanges, both inside and outside the United States, from which the company you are reviewing could have selected. Note that you do not need to list every exchange, just major exchanges with large market capitalization to give a sense of the diversity of markets available. In particular, you should briefly:

A. Identify the main features, similarities, and differences in the principal global organized exchanges. For example, what instruments or securities are traded in the different markets? Are some markets more focused on certain industries or commodities? Are some markets more prestigious or harder to enter than others?

B. Assess recent performance for the markets you identified in broad terms, focusing on factors that might affect IPO-listing decisions. Support your response with specific indicators and examples. For example, which markets are performing well? Which are highly volatile? What current events might impact the markets?

II. Macroeconomic Environment. This section should focus on external factors that can cause markets to move, and how and why those factors influence performance. You will use this information later in the report to inform your conclusions about the company’s market selection. Specifically, you should:

A. Assess how different economic environments, such as boom and bust cycles, affect markets both individually and collectively. In other words, consider how economic growth or scarcity affects individual markets and how the economic environment for one market affects others. Support your answer with examples from different markets and economic periods.

B. Explain how social and political climates can affect market performance, risks, and returns. Use real-world examples from different markets to support your answer.

C. Analyze how interest rates and inflation affect market performance, using real-world examples from different economic periods to support your answer. For example, how do interest rates affect business borrowing, personal investment, and lending?

D. Compare and contrast how different types of financial instruments, such as stocks, bonds, mutual funds, and commodities, respond to different macroeconomic environments, analyzing how that might affect a company’s IPO success. For example, are investors more likely to purchase shares of a newly listed company in certain contexts more than others? Will the cost of key commodities or services be higher in certain contexts?

III. Oversight and Governance. Use this section to explain how different markets are regulated, by which agencies, and how that might impact decisions on

which market(s) to list in. You must address: A. U.S. Exchanges. Select a major U.S. exchange(s) that the company you are reviewing could have considered in making its IPO listing decision. If

the company is listed on a specific U.S. exchange, use that market. Be sure to answer: 1. What rules and regulations do companies wishing to list on this U.S. exchange need to follow and how might that affect listing

decisions? Your answer should focus on basic entry and operation standards, including requirements for non-U.S. companies to trade on U.S. exchanges, citing relevant sources.

2. How are U.S. market regulations enforced and by which agencies? How might the costs of compliance and consequences of noncompliance have affected the company’s listing decision? Justify your response.

B. International Exchanges. Select a major non-U.S. exchange(s) that the company you selected could have considered in making its IPO listing decision. If the company is listed on a specific non-U.S. exchange, use that market. Specifically:

1. How can you determine the rules, regulations, and oversight bodies for this non-U.S. market? In other words, where would you look to find this information and how would you know to look there? Support your response with concrete examples.

2. What rules and regulations do companies wishing to list on this non-U.S. exchange need to follow and how is compliance enforced? How might those factors have affected the company’s decision? Your answer should focus on how basic market requirements and compliance mechanisms are (or are not) different than those for U.S. exchanges, citing relevant sources.

C. Multiple Markets. Analyze whether the selected company should or should not have considered listing its initial public offering (IPO) in more than one market. Justify your response. For example, can a company legally list in more than one market? If so, under what conditions? What are the risks and returns for attracting individual and corporate investors?

D. Interest. Analyze how interest rate policies and announcements affect returns and decisions about listing in the two markets you selected. Provide specific examples to illustrate your answer. For example, how are interest rates determined in U.S. versus non-U.S. markets? How do governments use interest rate decisions to try to influence the markets under different conditions?

IV. Risks and Returns. Use this section to analyze the risks and returns of different investment instruments in the U.S. and non-U.S. market you selected above. You may find it helpful to use online brokerage aids or other tools in conducting this analysis. Specifically, address the following:

A. Investment Instruments. Review stock, bond, mutual fund, and commodities performance in the two markets. Be sure to: 1. Analyze investment returns in each of the two markets, including dividend yields, capital gains, prices relative to intrinsic values, and

foreign exchange considerations associated with each of the instruments. Use relevant indicators and visual displays to help present your findings.

2. Explain what your analysis of returns suggests about each market’s performance and how that might affect decisions on where to list. Justify your response.

3. Compare and contrast how the different types of instruments move in the two markets over time, explaining the significance of this information for decisions on where to list. Provide specific examples to support your answer. For example, have certain types of instruments historically performed better in one market over another? Have certain types of instruments yielded higher returns more quickly?

4. Assess the risks versus returns associated with the different types of investment instruments in the two markets. How might these trade- offs affect listing decisions? Support your response with specific examples.

B. Interest and Inflation. Analyze how interest rates and inflation affect different investment instruments and investor decisions. Give specific examples from the two markets selected to support your answer. For example, how do inflation and interest rates affect stock, bond, and mutual fund returns in each market? How does that, in turn, affect business and individual short- and long-term investment planning?

C. Taxation. Would tax policies in the two markets make one a better option for IPO listing than the other? Why or why not? Give specific examples.

V. Conclusions. Use this section to draw conclusions based on your analysis. Specifically: A. Did the company you selected make a sound choice on which market to list in based on the macroeconomic climate, regulatory environment,

and risks and returns? Might the other market you analyzed have yielded better returns? Justify your response. B. What role did different financial institutions play in helping the selected company achieve its financial goals, and what might that suggest for

the upcoming project? For example, what criteria should a company use to select and assess the reliability of potential intermediaries?

Milestones

Milestone One: Draft of Market Overview (Section I) In Module Two, you will submit a draft of the Market Overview (Section I). This milestone will provide an overview of the main organized exchanges, both inside and outside the United States, which could have been selected by the company you chose to review. You will analyze any similarities, differences, and performance of selected exchanges. Please note that not every exchange needs to be covered, but rather just major exchanges with large market capitalization to give a sense of the diversity of markets available. This milestone is graded with the Milestone One Rubric. Milestone Two: Draft of Macroeconomic Environment (Section II) In Module Three, you will submit a draft of the Macroeconomic Environment (Section II). This milestone will focus on external factors that can cause markets to move as well as how and why those factors influence performance. External factors can include economic environments, social and political factors, and interest rates and inflation. You will also include an analysis of different investment vehicles (stocks, bonds, mutual funds, etc.) in different economic climates. This information will be used later in the final report to inform your conclusions about the company’s market selection. This milestone is graded with the Milestone Two Rubric. Milestone Three: Draft of Oversight and Governance (Section III) In Module Four, you will submit a draft of Oversight and Governance (Section III). This milestone will explain how different markets are regulated, by which agencies, and how that might impact decisions on which market(s) to list in. Rules, regulations, and regulators of U.S. and international exchanges should be explored. In addition, you will research listing in multiple markets and how interest rates may affect one market over another. This milestone is graded with the Milestone Three Rubric. Milestone Four: Draft of Risks and Returns (Section IV)

In Module Five, you will submit a draft of Risks and Returns (Section IV). In this milestone, you will analyze the risks and returns of different investment instruments in the U.S. and non-U.S. markets you selected in Milestone One. You may find it helpful to use online brokerage aids or other tools in conducting this analysis. Review stock, bond, mutual fund, and commodity performance and their movement over time in these markets. Your analysis should include dividend yields, capital gains, price relative to intrinsic values, and foreign exchange considerations. Last, you will come to a conclusion about each market’s performance and access risk versus return when comparing investment vehicles within the different markets. This milestone is graded with the Milestone Four Rubric. Final Submission: Market Analysis Report In Module Seven, you will complete the conclusion (Step V) and submit your comprehensive market analysis report. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. The final submission will be graded using the Final Project Rubric.

Deliverables

Milestone Deliverable Module Due Grading

One Draft of Market Overview Two Graded separately; Milestone One Rubric

Two Draft of Macroeconomic Environment Three Graded separately; Milestone Two Rubric

Three Draft of Oversight and Governance Four Graded separately; Milestone Three Rubric

Four Draft of Risks and Returns Five Graded separately; Milestone Four Rubric

Final Submission: Market Analysis Report Seven Graded separately; Final Project Rubric

Final Project Rubric Guidelines for Submission: Your market analysis report should be 8–10 pages long (not including references or appendixes). It should use double spacing, 12- point Times New Roman font, and one-inch margins. Use APA formatting for references.

Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value

Market Overview: Principal Exchanges

Meets “Proficient” criteria and response is particularly insightful or nuanced in reflecting the diversity of markets available

Identifies the main features, similarities, and differences in the principal global organized exchanges

Identifies the main features, similarities, and differences in principal global organized exchanges, but response contains inaccuracies or omits key details

Does not identify the main features, similarities, and differences in the principal global organized exchanges

3

Market Overview: Recent Performance

Meets “Proficient” criteria and assessment, indicators, or examples demonstrate keen insight into diverse elements of market performance that could affect IPO-listing decisions

Assesses recent performance for markets identified in broad terms, focusing on factors that might affect IPO-listing decisions and supporting response with specific indicators and examples

Assesses recent performance for markets identified, supporting response with specific indicators and examples, but response contains inaccuracies, omits key details, or indicators and examples are not relevant

Does not assess recent performance for markets identified in broad terms, supporting response

4.7

Macroeconomic: Boom and Bust

Meets “Proficient” criteria and response is particularly insightful, nuanced, or comprehensive

Assesses how different economic environments affect markets both individually and collectively, supporting answer with concrete examples from different markets and economic periods

Assesses how different economic environments affect markets individually and collectively, supported by examples, but response contains inaccuracies, omits key details, or examples are irrelevant or do not cover different markets and economic periods

Does not assess how different economic environments affect markets both individually and collectively, supported by examples

4.7

Macroeconomic: Social and Political

Meets “Proficient” criteria and analysis or examples are particularly insightful, nuanced, or comprehensive

Explains how social and political climates can affect market performance, risks, and returns, using real-world examples from different markets to support answer

Explains how social and political climates can affect market performance, but does not support with relevant examples from different markets, or response contains inaccuracies or omits key details

Does not explain how social and political climates can affect market performance, risks, and returns

4.7

Macroeconomic: Interest Rates

Meets “Proficient” criteria and response is particularly insightful, nuanced, or comprehensive

Analyzes how interest rates and inflation affect market performance, using real-world examples from different economic periods to support answer

Analyzes how interest rates and inflation affect market performance, but does not support with relevant examples from different economic periods, or response contains inaccuracies or omits key details

Does not analyze how interest rates and inflation affect market performance

6.26

Macroeconomic: Financial Instruments

Meets “Proficient” criteria and response demonstrates particular insight with respect to diversity of instruments, their response to macroeconomic pressures, and their relation to IPO success

Compares and contrasts how different types of financial instruments respond to different macroeconomic environments, analyzing how that might affect a company’s IPO success

Compares and contrasts financial instruments’ responses to different macroeconomic environments, but does not analyze effect on a company’s IPO success, or response contains inaccuracies or omits key details

Does not compare and contrast how different types of financial instruments respond to different macroeconomic environments

6.27

Oversight: Rules

Meets “Proficient” criteria and response is particularly well focused on rules and regulations salient to listing decisions

Determines how rules and regulations for listing on U.S. exchanges affect listing decisions, focusing on basic entry and operation standards and citing relevant sources

Determines how rules and regulations for listing on U.S. exchanges affect listing decisions, but does not focus on basic entry and operation standards, does not cite relevant sources, or response contains inaccuracies or omits key details

Does not determine how rules and regulations for listing on U.S. exchanges affect listing decisions

4.7

Oversight: Enforced

Meets “Proficient” criteria and response is particularly insightful, nuanced, or comprehensive

Determines how U.S. market compliance mechanisms, costs, and consequences might affect listing decision

Determines how U.S. market compliance mechanisms, costs, and consequences might affect listing decision, but response contains inaccuracies or omits key details

Does not determine how U.S. market compliance mechanisms, costs, and consequences might affect listing decision

4.7

Oversight: International:

Determine

Meets “Proficient” criteria and response is particularly comprehensive or insightful

Explains how to determine rules, regulations, and oversight bodies for non-U.S. markets, supporting response with concrete examples

Explains how to determine rules, regulations, and oversight bodies for non-U.S. markets, supporting response with examples, but response contains inaccuracies, omits key details, or examples are not relevant

Does not explain how to determine rules, regulations, and oversight bodies for non- U.S. markets, supporting response with examples

4.7

Oversight: International: Regulations

Meets “Proficient” criteria and response is particularly well focused on rules and regulations salient to listing decisions

Determines how parameters for listing on non-U.S. exchange affect listing decisions, focusing on how basic entry and operation standards are (or are not) different than for U.S. exchanges, citing relevant sources

Determines how parameters for listing on non-U.S. exchange affect listing decisions but does not focus on differences with U.S. exchanges (or lack thereof), does not cite relevant sources, or response contains inaccuracies or omits key details

Does not determine how parameters for listing on non- U.S. exchange affect listing decisions

4.7

Oversight: Multiple Markets

Meets “Proficient” criteria and response is particularly insightful, nuanced, or comprehensive

Analyzes whether the company should or should not have considered listing its IPO in more than one market, justifying response

Analyzes whether the company should or should not have considered listing its IPO in more than one market, justifying response, but response contains inaccuracies, omits key details, or justification is illogical or irrelevant

Does not analyze whether the company should or should not have considered listing its IPO in more than one market

4.7

Oversight: Interest

Meets “Proficient” criteria and response or examples are particularly insightful, nuanced, or comprehensive

Analyzes how interest rate policies and announcements affect returns and decisions about listing in the two markets selected, providing specific examples to illustrate answer

Analyzes how interest rate policies and announcements affect returns and decisions about listing in the two markets selected, providing specific examples, but response contains inaccuracies or examples are not relevant

Does not analyze how interest rate policies and announcements affect returns and decisions about listing in the two markets selected

6.27

Risks and Returns: Dividend

Meets “Proficient” criteria and response is particularly insightful, nuanced, or well supported by high-quality visual displays

Analyzes dividend yields, capital gains, prices relative to intrinsic value, and foreign exchange considerations associated with instruments in markets selected, using relevant indicators and visual displays

Analyzes specified investment returns in markets selected but does not use relevant indicators and visual displays or analysis is cursory or contains inaccuracies

Does not analyze specified investment returns in markets selected

4.7

Risks and Returns: Suggest

Meets “Proficient” criteria and response is particularly insightful, nuanced, or well supported

Determines what analysis of returns suggests about each market’s performance and effect on listing decisions, justifying response

Determines what analysis of returns suggests about each market’s performance and effect on listing decisions, justifying response, but response contains inaccuracies or omits key details

Does not determine what analysis of returns suggests about each market’s performance and effect on listing decisions, justifying response

4.7

Risks and Returns: Types

Meets “Proficient” criteria and response provides a nuanced discussion of connection between movements of various instruments and listing decisions

Compares and contrasts movement of different instruments over time in selected markets, explaining significance for listing decisions and providing specific examples

Compares and contrasts movement of different instruments over time, explaining significance for listing decisions and providing specific examples, but response is cursory or contains inaccuracies, or examples are not relevant

Does not compare and contrast movement of different instruments over time in selected markets, explaining significance for listing decisions

4.7

Risks and Returns: Assess

Meets “Proficient” criteria and response is particularly insightful, nuanced, or well- supported

Assesses risks versus returns trade-offs in selected markets and how these affect listing decisions, supporting response with specific examples

Assesses risks versus returns trade- offs and how these affect listing decisions, supported by examples, but response is cursory or contains inaccuracies, or examples are not relevant

Does not assess risks versus returns trade-offs in selected markets and how these affect listing decisions

4.7

Risks and Returns: Interest and Inflation

Meets “Proficient” criteria and response is particularly insightful, nuanced, or well supported

Analyzes how interest rates and inflation affect different investment instruments and investor decisions, supported by specific examples from two markets selected

Analyzes how interest rates and inflation affect different instruments and investor decisions, supported by examples, but examples do not cover both markets, are not relevant, or response is cursory or contains inaccuracies

Does not analyze how interest rates and inflation affect different investment instruments and investor decisions

4.7

Risks and Returns: Taxation

Meets “Proficient” criteria and response is particularly insightful, nuanced, or well supported

Assesses whether tax policies in the two markets make one a better option for IPO listing than the other, justifying response with specific examples

Assesses whether tax policies in the two markets make one a better option for IPO listing than the other, justifying response with examples, but response contains inaccuracies or omits key details, or examples are not relevant

Does not assess whether tax policies in the two markets make one a better option for IPO listing than the other, justifying response with examples

4.7

Conclusions: Sound Choice

Meets “Proficient” criteria and response is particularly insightful, nuanced or well supported by analysis

Assesses whether selected company made a sound choice on market to list in based on macroeconomic climate, regulatory environment, and risks and returns, and if other market would yield better returns, justifying response

Assesses whether selected company made a sound choice on market to list in and if other market would yield better returns, justifying response, but response is cursory, contains inaccuracies, or is inconsistent with analysis presented

Does not assess whether selected company made a sound choice on market to list in and if other market would yield better results, justifying response

4.7

Conclusions: Financial Institutions

Meets “Proficient” criteria and response demonstrates especially strong insight into different institutions’ roles and the needs of IPO projects

Assesses role different financial institutions played in helping selected company achieve its financial goals and what that suggests for upcoming project

Assesses role different financial institutions played in helping selected company achieve its financial goals and what that suggests for upcoming project, but response contains inaccuracies or omits key details

Does not assess role different financial institutions played in helping selected company achieve its financial goals and what that suggests for upcoming project

4.7

Articulation of Response

Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-to-read format

Submission has no major errors related to citations, grammar, spelling, syntax, or organization

Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas

Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas

3

Earned Total 100%