Assessment 3: Research Report - Case Study

Overview

The assessment will involve a case study pertaining to different financial markets and

instruments. Students will be required to prepare a comprehensive Investment Strategy

Research Report for the client.

Learning Outcomes

The targeted Course Learning Outcomes for this assessment are:

• CLO1: Identify the nature and key components of financial systems domestically

and globally to apply in diverse contexts.

CLO2: Identify the nature, role and determinants of the structure and level of

interest rates in economics and financial contexts.

CLO3: Analyse the characteristics and functions of the main financial

intermediaries and the role of regulatory bodies in in financial systems in a global

context.

• CLO4: Assess the operations of the foreign exchange market including the nature

and determinants of exchange rates and relevant investment strategies.

CLO5: Explore the main features and theorems of capital markets, institutions and

securities including debt securities, equity and derivative products.

Assessment details

The assessment is a scenario-based research analysis report. You are required

to conduct independent research and write a 3000 words (-/+10%) report.

This assessment includes all the content covered in Topics 1 to 10.

The assessment is worth a total of 50 marks and accounts for 50% of the total

grade for this course.

Formatting

The report must be presented in standard report structure.

The report must be presented and submitted in Microsoft Word document.

You may use hand-drawn diagrams where applicable. Include the image of the

diagram - use balanced resolution so the information in the image is

Guidelines for text formatting:/nFinal Assessment - Research Report Case Study

Background:

As a financial advisor, you have the responsibility to educate and empower clients with a deep

understanding of market and economic systems to remove the mystery and fear associated

with investing. This approach fosters confidence and informed decision-making, enabling

clients to invest wisely regardless of external economic conditions.

Your task is to prepare a comprehensive Investment Strategy Report for your new client, Mr.

Vien. This report should align with Mr. Vien's client profile, including his wealth, risk preferences,

and investment objectives.

Report Requirement:

Your report should be well-supported with examples and credible sources, including peer-

reviewed journal articles, papers, books, industry reports, institutional reports, regulatory

standards, and official materials. Do not rely solely on general websites for information. A

minimum of 8 references is expected.

Detailed instructions for each section:

→ Executive Summary:

●

Provide a brief summary of the key findings, recommendations, and the client's profile and

objectives.

Introduction:

Offer context for the report and its purpose.

* Section 1: Market conditions and Monetary Policy

Discuss current market conditions in Australia and globally that may impact investment

decisions.

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Co/nRMIT Classification: Trusted

→ Section 2: Asset Classes Discussion

Select four distinct asset classes that you are knowledgeable about and conduct a

comprehensive analysis of their defining characteristics, associated risks, potential returns, and

provide illustrative examples for each asset class. You are encouraged to utilise diagrams,

charts, tables and figures in the discussion.

• Based on Mr. Vien's profile and risk preference, market conditions, and available asset

classes, recommend at least four additional suitable assets for his portfolio.

Explain to Mr. Vien regarding pros and cons of the right issue, assuming he owns 1000 Tesha

shares and below scenario:

In 2023, Tesha, Inc. conducted a rights issue to raise additional capital for its growth and

expansion plans. Shareholders were given the opportunity to purchase additional Tesha shares

at a discounted price on a ratio of 1:5. Tesha's stock price before the rights issue announcement

was approximately $800 per share. The discount price is $500 per share. Assuming Tesha has

1,000,000 shares and all shareholders exercise their rights.

Section 3: Funds Under Management

• Considering Mr. Vien's preference for cost-effective index funds and his pursuit of promising

returns, provide an overview of funds in his portfolio.

• Investigate and evaluate the historical performance, risk, and return of these funds compared

to benchmark indexes.

• Address potential overconfidence bias in Mr. Vien and propose a diversified fund selection

strategy.

• Introduce one or two new funds aligned with Mr. Vien's needs and your expertise.

• Explain fund measurement by calculating the coefficient of variation and Sharpe ratio using the

provided data and provide an interpretation of calculations.

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Co/n→ Section 4: Hedging Using Derivatives

Discuss the potential use of derivatives (e.g., options or futures) to hedge Mr. Vien's portfolio

against adverse market movements.

Explain the benefits and risks associated with derivatives-based hedging strategies.

Assess the alignment of these strategies with Mr. Vien's risk tolerance and overall investment

plan.

●

→ Conclusions:

Summarize key takeaways from the report. Emphasise the importance of informed decision-

making in achieving Mr. Vien's investment objectives.

> Reference List:

Follow the RMIT Harvard referencing style for all citations and references.