principles of financial management

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Assessment Task – Tutorial Questions Assignment 2 Unit Code: HA1022 Unit Name: Principles of Financial Management Assignment: Tutorial Questions Assignment 2 Due: 11:30pm, 26th June 2020 Weighting: 25% Total Assignment Marks: 50 Marks Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in this unit Unit Learning Outcomes Assessed:

1. Explain the institutional framework of the Australian Financial System;

2. Discuss the specific roles of Commercial Banks and NBFIs (Non-Bank Financial Institutions) in the Australian Financial System.

3. Discuss the Equity Market, the instruments available and their uses;

4. Discuss the Short- and Long-Term Debt Markets, the instruments available and their uses;

5. Discuss workings of Foreign Exchange Markets and how they facilitate international trade;

6. Discuss the Derivative Market, the instruments available and their uses;

7. Perform calculations to value securities traded in the financial markets. Description: Each week students were provided with three tutorial questions of varying degrees of difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions for weeks 6 to 10 inclusive and submit these answers in a single document.

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The questions to be answered are:

Week 6 – Question 1 (10 marks) 1. Describe the three (3) concepts listed below:

a) Simple interest rate. b) Present value & Future value of an amount c) Yield - in the context of bank term deposit and discount securities.

Week 7 – Question 2 (10 marks) 2. A company issues a bank-accepted bill to fund a short-term business project. The bill is issued

for 180 days, with a face value of $2 500 000 and a yield of 12.87 per cent per annum. What amount will the company raise to fund the project?

Week 8 – Question 3 (10 marks) 3. Explain what the bank process is to consider higher or lower credit risk for a variable rate loan

contract for prospective borrowers? Week 9 – Question 4 (10 marks)

4. You are considering the purchase of a Treasury bond in the secondary market. Bonds with exactly 10 years to maturity, paying a half-yearly coupon of 4.00 per cent per annum, are currently yielding 4.50 per cent per annum. The bond has a face value of $2000. What price should you pay for the bond today? (Note: The previous coupon has been paid today to the present holder of the bond.)

Week 10 – Question 5 (10 marks) 5. Explain and discuss the potential reasons why each of the parties listed below participate in

Foreign Exchange (FX) markets;

a) Importers, b) Exporters, c) Investors, d) borrowers

(Note: You should provide examples to expand your answer for each party.)

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Submission Directions The assignment has to be submitted via Blackboard. Each student will be permitted one submission to Blackboard only. Each student needs to ensure that the document submitted is the correct one.

Academic Integrity Academic honesty is highly valued at Holmes Institute. Students must always submit work that represents their original words or ideas. If any words or ideas used in a class posting or assignment submission do not represent the student’s original words or ideas, the student must cite all relevant sources and make clear the extent to which such sources were used. Written assignments that include material similar to course reading materials or other sources should include a citation including source, author, and page number. In addition, written assignments that are similar or identical to those of another student in the class is also a violation of the Holmes Institute’s Academic Conduct and Integrity Policy. The consequence for a violation of this policy can incur a range of penalties varying from a 50% penalty through to suspension of enrolment. The penalty would be dependent on the extent of academic misconduct and the student’s history of academic misconduct issues. All assessments will be automatically submitted to Safe-Assign to assess their originality. Further Information For further information and additional learning resources, students should refer to their Discussion Board for the unit.