iii). to assess the following statement: share prices fully reflect all available information on a particular share according to the efficient market hypothesis (EMH) (Bodie et al (1997). If this is the case, can you find any evidence to support that the

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Assignment and Submission - MAF307

1 The assignment is compulsory. To reduce our carbon footprint, all assignments are to be submitted electronically through dropboxes in Cloud Deakin (CD). No hardcopy assignment submission is required. 2. The assignment due date is 11:59pm, 16 September (Friday). You should be aware of your eligibility for special consideration (see the Deakin University Handbook). Otherwise, in no case will the extension be granted for the assignment completion and submission. 3. To reflect the manner in which most corporations conduct business, students shall form groups of four to handle this assignment. It is up to the students to form the groups. Faculty members will not entertain requests relating to group formation. 4. Once a group is formed, you are required to register into a group under “Groups” on CD, which also aids you to successfully submit your assignment. 5. If you submit work to be marked after the due date you will incur a deduction of 20% from the total marks, for each calendar day of the week the assignment is late, for up to 5 calendar days. Further, we will not accept any submission after 11:59pm on Wednesday (21 September). For example, if the due date is Friday 16th September 2016 and you do not have an extension approval from the Unit Chair and hand your work in late on the next day which is Saturday 17th September 2016, 20% of the total marks, equivalent of 4 marks, will be deducted. If your work is marked as worthy of a grade of 16, you will only receive 12 for it after applying the penalty. 6. CloudDeakin submission: Each group needs submitting only once. Please use your IDs naming your files, such as 700374***_600039***_210039***_3600589***_MAF307_Report_2015T1.doc(x). 7. A copy of the assignment must be kept by students to cover the possibility of lost assignments. Good luck.

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DEAKIN UNIVERSITY

FACULTY OF BUSINESS & LAW SCHOOL OF ACCOUNTING ECONOMICS& FINANCE

MAF307 EQUITIES AND INVESTMENT ANALYSIS ASSIGNMENT - Trimester 2, 2016

This written assignment has three parts:

PART I

In order to approximate business practice, where an individual's performance evaluation reflects not only the opinion of supervisors but also that of his or her peers, group members shall evaluate one another’s investment journals. Each group member has to critically analyse another member’s investment strategy, including, but not limited to, comparing their investment performance, return expectations, risk appetite, frequency of trading, stock selection decisions, those investment strategies that worked and those that failed. Students can choose to make their analysis based on the two submitted journals, or based on the entire six weekly journals if a group member happens to have one. Students can use this written analysis as the base to articulate their oral presentation. Please keep the overall length of your group oral presentation to approximate five minutes (Hint: Most estimated the number of words/minute around 100.) (Word limit guidance - 800, 5 marks)

PART II

(a). Identify the best- and worst-performing shares from your group members. Assess whether the different performance is due to the different impact on the shares brought by 1). macroeconomic environment; 2). industry/sector life cycle; 3) government or the central bank’s policies; 4). foreign economic influence; 5). firm specific policy or action, etc. (b). Use last 2-year daily prices data to calculate the above shares’ returns and variances or standard deviations. Examine and comment on whether your group’s best- and worst- performing shares can be identified from this information. (Hint: The daily prices can be drawn from websites such as Yahoo finance, Google finance or the Australian Financial Review, etc.) (Word limit guidance - 1000, 7 marks)

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PART III

As an analyst for Vandelay brokerage firm, your supervisor has handed you a video clip – an interview between Ticky Fullerton of The Business of ABC, and the fund manager, Roger Montgomery (You need to watch it first. You can access the video file in the same folder). During the interview, Roger Montgomery raised several share names in the data centre storage business. Focus

on the following two stocks, NXT (NextDC) and VOC (Vocus Communications). Your supervisor asked you to write a report: i). to find the share prices of the above two stocks at the time of the interview (say, around 25th April of 2013) and their current stock prices. What do you find? ii). to examine and investigate the background and reasons (or risk factors) behind this dramatic share price difference. What are the reasons, if any, resulting in the price dispersion? iii). to assess the following statement: share prices fully reflect all available information on a particular share according to the efficient market hypothesis (EMH) (Bodie et al (1997). If this is the case, can you find any evidence to support that the market was fully informed? Does the EMH mean anything to you in explaining the share price difference? Why and/or why not? iv). to make a recommendation for both stocks based on your research on behalf of your firm to your clients – to buy hold or sell. (Word limit guidance - 1200, 8 marks)

Reference Zvi Bodie, Mohamed Arif, Raymond da Silva Rosa, Alex Kane and Alan J Marcus (2007), Investments, McGraw-Hill Irwin Australia.