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Module Code:	MN0491
Module Title:	Corporate Financial Management
Distributed on:	Immediate	Hand in Date:	Advised by PG Office

Further information about general assessment criteria, ARNA regulations, referencing and plagiarism can be found on the module’s site on the e-Learning Portal. Students are advised to read and follow this information.

Instructions on Assessment:

This assignment has two distinct parts:

Part A (50%) 1000 words

1. With regard to Efficient Market Hypothesis test the FTSE 100 index. Your answer should cover the most recent 2 year period, and test for weak form efficiency using regression analysis and hypothesis testing. You are specifically required to:

a. Create an equally weighted portfolio (A) of 5 random companies* from the index. Calculate monthly logarithmic returns for that portfolio.

b. Create an equally weighted portfolio (B) of 5 companies using technical analysis (i.e. for the preceding 6 months to the 2 year period select 5 companies with the steepest positive slope of the regression line representing weekly share price movements of the companies against the market). For this you need to screen the entire index. For the selected companies, calculate monthly logarithmic returns for the same period as portfolio A.

c. Correctly specify the hypothesis for testing weak form market efficiency.

d. Test the data representing logarithmic returns of the two portfolios for weak form efficiency by means of the one tail independent samples T-test selecting an appropriate level of significance.

e. Discuss your findings in terms of the results of the test.

f. Critically evaluate generalisability of your findings in terms of contemporary empirical study findings on weak form market efficiency and Random Walk Theory.

* - this must be done independently and therefore you should end up with a Portfolio A which is different from other students.

(50 Marks)

Please turn over

Part B (50%) 1500 words

Section B Academic Essay

You are required to write one of two essays. Both of the essays relate to International Merger & Acquisition activity in the pharmaceutical industry, in particular the bid by Bayer to buy Monsanto for $56 bn. Specifically the students are required in their chosen essay to reference key components of the “Case Article”, and Bayer press releases relating to the merger (links provided below). Students are also required to conduct independent research to collect all relevant information about the deal.

Essay 1

1. You are required to critically evaluate the effect of Capital Structure and Cost of Capital upon the wealth returns that Bayer’s shareholders can expect when the a company engages in International Merger and Acquisition activity. Your answer should specifically relate to Bayer’s bid for Monsanto, and demonstrate an extensive engagement with appropriate academic literature. Students are expected to specifically comment on the method of funding for the Bayer’s bid and use academic literature to critically analyse the possible effects for the bid structure, and are expected to specifically comment on the method of financing specified in the below press release:

http://press.bayer.com/baynews/baynews.nsf/id/2016-0157-EN

Your essay should conclude by coming to a judgement as to whether or not Bayers’ shareholders should support the deal as one which would be wealth creating, or otherwise.

(50 Marks)

Essay 2

2. You are required to critically evaluate the ways in which Monsanto shareholders can first understand the value of the shares they own, and then use that evaluation to judge whether or not bids for those shares rationally and efficiently reflect ‘good value’ in a dynamic marketplace. Your essay should comment specifically on the section (below) of the article related to market price reactions to Bayer’s $56bn bid and display an extensive engagement with appropriate academic literature.

Bayer announced this week “advanced negotiations” and a sweetened offer of $127.50 a share, or $56 billion, as both sides seek to end more than three months of back-and-forth over price . The bid is 18 percent above Monsanto’s closing price on Thursday in New York and if successful, would lead to the biggest deal this year and largest ever by a German company.

Monsanto has been pushing for a price closer to $130 a share, according to people familiar with the matter. The companies are also discussing increasing the $1.5 billion break fee that Bayer would pay Monsanto if the deal doesn’t pass muster with regulators, one of the people said.

Your essay should conclude by coming to a judgement as to whether or not Monsanto shareholders should accept the deal at the offered price.

(50 Marks)

Annual Report:

Bayer

http://www.investor.bayer.de/en/reports/annual-reports/overview/

Additional press releases:

http://press.bayer.com/baynews/baynews.nsf/id/Bayer-Comments-on-Monsantos-Statement-Regarding-its-Increased-All-cash-Offer

http://press.bayer.com/baynews/baynews.nsf/id/Bayer-Comments-on-Monsantos-Statement-Regarding-Proposed-Transaction

http://press.bayer.com/baynews/baynews.nsf/id/Bayer-Confirms-Preliminary-Discussion-Regarding-Acquisition-of-Monsanto

Word limits and penalties for assignments

If the assignment is within +10% of the stated word limit no penalty will apply.

The word count is to be declared on the front page of your assignment and the assignment cover sheet. The word count does not include:

· Title and Contents page	· Reference list	· Appendices	· Appropriate tables, figures and illustrations
· Glossary	· Bibliography	· Quotes from interviews and focus groups.

Please note, in text citations [e.g. (Smith, 2011)] and direct secondary quotations [e.g. “dib-dab nonsense analysis” (Smith, 2011 p.123)] are INCLUDED in the word count.

If this word count is falsified, students are reminded that under ARNA page 30 Section 3.4 this will be regarded as academic misconduct.

If the word limit of the full assignment exceeds the +10% limit, 10% of the mark provisionally awarded to the assignment will be deducted. For example: if the assignment is worth 70 marks but is above the word limit by more than 10%, a penalty of 7 marks will be imposed, giving a final mark of 63.

Students are advised that they may be asked to submit an electronic version of their assignment.

Time limits and penalties for presentations

The time allocated for the presentation must be adhered to. At the end of this time, the presentation will be stopped and will be marked based on what has been delivered within the time limit.

Submission of Assessment:

All assignments must be submitted via the Postgraduate Programme Office. Each assignment must be accompanied by an Assessed Work Form which must be completed in full. The assignment will not be accepted by the Postgraduate Programme Office unless the form is completed correctly.

Marked assignments will be returned to students. It is advisable to retain a copy of your assignment for you own records. Your mark will be returned on the Assessed Work Form via the Postgraduate Programme Office.

Mapping to Programme Goals and Objectives:

This assessment will contribute directly to the following Postgraduate programme goals and objectives.

Goal One: Be independent, reflective critical thinkers

	1.	Demonstrate awareness of their personal strengths and weaknesses through critical reflective practice.
	2.	Understand and challenge personal patterns of thinking and behaving.

Goal Two: Be culturally and ethically aware

	1.	Demonstrate their ability to work in diverse groups and teams.
	2.	Reflect on their own ethical values.

Goal Three: Have developed leadership and management capability

	1.	Demonstrate their personal contribution to team effectiveness.
3	2.	Communicate complex issues effectively.
3	3.	Demonstrate decision making and problem solving skills.
	4.	Carry out presentations and lead discussions.

Goal Four: Have developed and applied knowledge of international business and management theory

3

1.

Acquire, interpret and apply knowledge of international business, management and organisational functions.

Goal Five: Have developed a range of research skills and project capabilities

	1.	Plan and complete a major individual piece of research on a contemporary business, management or leadership topic of their choice.
	2.	Demonstrate skills of analysis and synthesis in the application of research methods to the exploration of contemporary business issues.

Goal Six: Have developed specialist knowledge about the theory and practice of your programme of study

3

1.

Demonstrate specialist functional knowledge in relation to your programme of study.

Assessment Criteria (NBS)

Module Specific Assessment Criteria

Trait	0 Fail	1 – 39 Fail	40 – 49 Fail	50 – 54 Pass	55 – 59 Pass	60 – 69 Commendation	70 – 100 Distinction
Critical Appraisal	Students work fails to demonstrate even the most basic levels of the ability to appraise.	Inarticulate and lacks coherence, students work lacks evidence of even a crude level of appraisal	Crude and lacking application to vignette, students work gives an overview of theory without demonstrating ability to appraise the issues in application.	Appraisal of the vignette demonstrates an ability to interpret the application of theory to a real world company, highlighting (in a perhaps superficial way) differences and divergences well.	Appraisal demonstrates a good ability to go beyond the obvious implications and conclusions.	Clear, coherent and importantly cohesive as an appraisal. Well-structured demonstrating the ability to form a well-considered argument.	Demonstrates independent thought and reflection, thinking around the issues, and going beyond a simple application of theory.
Coming to rational judgments, logic and strength of reasoning			Students work lacks evidence of a basic ability to form evidence based judgments.	Judgments made, but evidence and reasoning not always clear and/or coherent.	Judgments are based on evidence and clear reasoning with student demonstrating a clear linkage between logical lines of thought to come to their conclusions.		Outstanding evidence of a well-considered and weighted judgment with the students calibration of the evidence and reasoning being exceptional.

Note: For those assessments or partial assessments based on calculation, multiple choice etc. Marks will be gained on an accumulative basis. In these cases, marks allocated to each section will be made clear.

Students must retain an electronic copy of this assignment and it must be made available within 24 hours of them requesting it be submitted.