Category: Finance

Discuss how the convergence of Fintech, social media and traditional financial markets have shifted the dynamics of retail investing, utilising – where relevant – concepts discussed in the module including (but not limited to) key objects of exchange, agents/actors, ties, and structures of relations between agents, the assembling of trades and the use of distributed cognition.

Liability

QUESTIONS Assignment Questions
Using the above case study links above, along with what you find out from your further reading
and research on the topic, and focusing on the literature discussed in the module,
Answer BOTH questions below.

Answer each question separately as a stand-alone mini essay. use HAVARD REFRENCING STYLE

Question 1(1350 words). Discuss how the convergence of Fintech, social media and traditional financial
markets have shifted the dynamics of retail investing, utilising – where relevant
– concepts discussed in the module including (but not limited to) key objects
of exchange, agents/actors, ties, and structures of relations between agents,
the assembling of trades and the use of distributed cognition.

Important: research these key terms: key objects of exchange, agents/actors, ties, and structures of relations between agents, the assembling of trades and the use of distributed cognition.

In case you don’t know already so that what you write makes sense.

Also fintech refers to the following: Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services.

At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of “financial technology”.

[50 marks]

Question 2 (1400 words). Within the first US congressional hearing relating to the GameStop

Describe how opening up to international trade affects the following?Describe how opening up to trade specifically affects a domestic monopoly.

Unit 3 Essay Finance
International trade can have big effects on domestic markets.

For both an import good and an export good (in other words, address each bulleted item below twice—once for import and once for export), describe how opening up to international trade affects the following:
supply or demand for the particular good,

The competitiveness of that good’s market, and how the change in competitiveness affects equilibrium price and quantity.

Stepping away from the import/export examples, describe how opening up to trade specifically affects a domestic monopoly.

Include an explanation, using game theory, of how even a single additional competitor can lead to a market outcome similar to perfect competition.

Your essay must be at least three pages in length (not counting the title and references pages) and include at least three peer-reviewed resources. Adhere to APA Style when writing your essay, including citations and references for sources used.

Be sure to include an introduction.

note that no abstract is needed.

Evaluate the two matrices using current actions by each country to see which matrix is most likely correct.

Unit 4 Discussion Question

Incorporate the concepts of game theory with international trade and tariffs.

Set up two payoff matrices.

Set up the first payoff matrix such that the outcome will be harmful to both countries.

Set up the second payoff matrix such that the outcome will be beneficial to the United States.

Evaluate the two matrices using current actions by each country to see which matrix is most likely correct.

Discuss with your classmates whether or not the ensuing trade war will produce successful outcomes.

Discuss whether the widespread adoption by retail brokerages such as Robinhood of a payment-for-order-flow model, along with the proliferation of dark pools, represents a fundamental restructuring of financial markets relative to the commission-based brokering model involving execution of orders through public exchanges.

Social studies of finance

Case Study

The case study comprises the testimony and supporting documentation from the US House of Representatives Committee on Financial Services dated Thursday, February 18, 2021.

House of Representatives (2021) House Financial Services Committee. Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide. Hearing, 18th February. Washington: Government Printing Office. Online. Available at:

Assignment Questions

Using the above case study, along with what you find out from your further reading and research on the topic, and focusing on the literature discussed in the module, answer BOTH questions below.

Answer each question separately as a stand-alone mini-essay of not more than 1500 words, but use a common reference list for both and make sure your individual answers are within +/- 10% of the overall word-count of 3000 words.

1. Discuss how the conver gence of Fintech,social media and traditional financial markets has shifted the dynamics of retail investing, utilising – where relevant – concepts discussed in the module including (but not limited to) key objects of exchange, agents/actors, ties and structures of relations between agents, the assembling of trades and the use of distributed cognition.

[50 marks]

2. Within the first US congressional hearing relating to the Gamestop controversy, Robinhood’s business model was critiqued, while Warren Davidson, the Representative for Ohio, referenced the DTCC’s Project Ion, which explores the use of blockchain technology to improve the efficiency of payment and settlement functions within financial markets.

Discuss whether the widespread adoption by retail brokerages such as Robinhood of a payment-for-order-flow model, along with the proliferation of dark pools, represents a fundamental restructuring of financial markets relative to the commission-based brokering model involving execution of orders through public exchanges.

With reference to the Gamestop controversy, discuss whether a blockchain- based payment and settlement system (such as Project Ion or Project Whitney) might affect current market practices.

[50 marks]
2

Suggested readings

The following are readings that could be of help in preparing your assignment: Battalio, R. and Loughran, T. (2008) Does Payment For Order Flow To Your Broker

Help Or Hurt You? Journal of Business Ethics, 80, pp.37-44.

Ben-Abdallah, R. and Breton, M. (2015) To Squeeze or Not to Squeeze? That Is No

Longer the Question. Journal of Futures Markets, 36(7), pp.647-670.

Chiu, J. and Koeppl, T. (2019) Blockchain-Based Settlement for Asset Trading. The

Review of Financial Studies, 32(5), pp.1716-1753.

Culp, C. and Heaton, J. (2008) The Economics of Naked Shorting, Regulation 31, 46-

51.

DTCC (2020a) Project Ion Case Study. 25760-PS052020. New York: The Depository Trust and Clearing Corporation. Online. Available at:

services/user-documentation/Project-ION-Paper-2020.pdf

DTCC (2020b) Project Whitney Case Study. 25733-TC042920. New York: The Depository Trust and Clearing Corporation. Online. Available at:

services/user-documentation/Project-Whitney-Paper.pdf

FCA (2019) Payment for Order Flow (PFOF). Pub ref: 005980. London: Financial Conduct Authority. Online. Available at: order-flow-pfof.pdf

Pagano, M., Sedunov, J. and Velthuis, R. (2021) How did retail investors respond to the COVID-19 pandemic? The effect of Robinhood brokerage customers on market quality. Finance Research Letters, In Press.

Consider an investment in an international venture. Identify the advantages and disadvantages of this investment, based upon the following:

International Financial Management

Finalize the key assignment that you started in the previous unit.
identify the advantages and disadvantages of this investment based on the capital structure of the firm.

Following are the specifications for the original assignment:

Consider an investment in an international venture. Identify the advantages and disadvantages of this investment, based upon the following:

Forecasting foreign currency exchange rates

Interest rate and relative purchasing power parity, and forecasting

Foreign investment policies

Government limitations on foreign investments

Trade regulation and policies

International finance regulations

Explain how investment decision Making for Managers

Explain how investment decision Making for Managers

1. Use the Excel Sheet – Yeop! Beverages Data set to write a report using the 2020 Business Report Template

2. Use https://www.readyratios.com/ for an understanding of the ratios

3. Compare the company to Coca-Cola https://www.readyratios.com/sec/KO_coca-cola-co

4. Use academic resources for references using Harvard referencing

Useful tips
understand the data sheet

⁃ What the ratios mean

⁃ External links to understand the ratios

⁃ Understand the ratios (ready ratios)

⁃ Understand each of the ratios and what they mean

⁃ Compare with competitor company COKE COCA COLA

⁃ Find coke on the same parameters

⁃ Understand payout ratio means

⁃ Profitability, liquidity, efficiency, leverage & market

⁃ Able to compare the company with cocoa cola DO 2019 DATA

⁃ Understand the capital structure of the company and how well it utilises its assets

⁃ 52 week average working well in the markets

⁃ Data sheet: share statistics A20 DOWN aren’t applicable besides outstanding shares

⁃ Identify what you want to speak about categorise in those categories

⁃ Interpreter the meaning of the ratios

⁃ Assessed by the media campaign by the increase of obesity by the government by drinking healthier

⁃ Overcome this negative campaign

Compare backtests, and show why Stochastic trading rule is best based on backtests. The backtests you can find in GBUS.zip.

Technical Analysis/Backesting through Metastock

The task given was the following:

1. A UK based hedge fund has asked you to find a simple technical trading rule to manage

their position in one UK equity over the coming 1-2 years. The aim of the technical

trading rule is to outperform a simple buy-and hold strategy.

Typical clients of the fund are high net worth individuals and small investment funds.

2.Your Technical Expert (i.e. the Professor) will send you details of backtests of three

technical trading rules on this instrument, but no other information. Backtesting for 1274 and 604 days for each of the trading rule.

3. Based on these results, have chosen Stochastic technical trading rule to manage the

fund position in the equity over the next two years.

4. What ask to be done is the following, –

– A summary of the process and findings from your back-tests(create summary table of the most important factors from backtests, not all, but main ones:

Profit

Performance

Annualized Perfomance

Total Trade

Trade Efficiency

Average Proft/Average loss

Reward/Risk Index

Overdrafts

And more if you find other factors important

– Clear explanation of the meaning and optimum values of the parameters

-Clear rationale for the choice of choosing Stochastic the rule to be used in trading, rather than Moving Average and RSI. Compare backtests, and show why Stochastic trading rule is best based on backtests. The backtests you can find in GBUS.zip.

Explain at least three factors that would result in a shift in the demand curve for that good and three factors that would result in a shift in the supply curve for that good.

Unit 3 Discussion Question

Identify a good you commonly use or would like to use.

Explain at least three factors that would result in a shift in the demand curve for that good and three factors that would result in a shift in the supply curve for that good.

Describe the effect on equilibrium price and quantity of each factor.

Finally, explain how the shifts in demand and supply are different from movements along the demand curve or movements along the supply curve and why the distinction is important.

What is your assumption about financing of capex and change in working capital??What model you would like to use stable growth, two periods or three period growths???

Finance valuation of En+ group

The Final Assignment

1. Find and download financial statements for 5-7 years.  put the data in excel file. Put Income statement data (for different years in one sheet, the balance sheet data in another, the same for the cash flow data… make sure that data are consistent through year (so that you can do horizontal analysis)

2. In addition download market data for the target (P/E, MV/BV, stock prices) + multiples for similar firms (peers)

The idea is

• Value your company by two methods
1) Discounted CF method
2) Relative valuation (using multiples)

• Compare your results with the market price

 

For discounted cash flow approach
• What model you would like to use stable growth, two periods or three period growths??? To decide you need to check if company is mature or growing.

• In case you see that the company’s current growth (EPS, sales) above 2%-3% (above the industry average, fluctuate a lot) you have to use either two or 3 stage growth model

• Project cash flow for the period of unstable growth (use percentage of sale method to project financials)

• Estimate the terminal value at the end of the period of unstable growth ( using formula for growing perpetuity)

• Think of the discount rate you would like to use to compute PV of cash flow. Different rate for different stage of growth? Or the same???

• Remember discount rate will depends on the capital structure of the firm, (If country significantly changed its D/E ratio in recent period you

have to use industry average as a target structure and use it for calculation of discount rate for stable growth period) You may ned to adjust cash flow as well to reflect this changes

• Do not forget to make assumptions about growth rate of capex, depreciation in different periods of growth (you might look at industry peers data). They should align with your projections of sales.

• What you would like to value 1) entire firm (FCFF) or only equity part (FCFE or Dividend)

• Use WACC for firm valuation, required rate of return for equity for equity valuation
For equity valuation

• Dividend discount model or) Free cash flow to the equity.

• This depends on if company pays dividends, whether they are stable and some other factors ( imagine you purchase a big stake of the equity and you can influence the firm decision on dividends, in this case you should use FCFE)

• How to estimate the growth rate of dividend and growth rate of FCFE (ratios using historical average, industry average)

• What is your assumption about financing of capex and change in working capital??

• After computing value of equity you will add MV of debt to get your own estimate of the value of the firm. Remember you will compute enterprise value (PV (Future CF to the equity)+Debt)).

Valuation of FCFF will give you the enterprise value.

• If your company change its capital structure one way to avoid mistakes is to use FCFF, (at least you do not need to adjust FCFE)

• Still if you think that the current capital structure will not sustain in the future you should adjust WACC.

• To compare your results with market value

• Market price of the stock x Nmb of stocks outstanding + MV(Debt) – Cash =Enterprise value

For relative valuation, you need to do is to decide which multiple is more relevant in your case.

Questions to keep in mind

• Equity multiples versus Firm multiples

Rem: Firm value multiples allow for direct comparison of different firms, regardless of capital structure.

• EBITDA (both equity of firm)multiple is one of the most commonly used valuation metrics, as EBITDA is commonly used as a proxy for cash flow available to the firm.

• When a company has negative EBITDA, the EBITDA and EBIT multiples will not be material. In such cases, Sales multiple may be the most appropriate multiple to use.

• When depreciation and amortization expenses are small, as in the case of a non-capital-intensive company such as a consulting firm, EBIT and EBITDA will be similar.

• For the sake of consistency (because you want to compare both DCF and relative valuation results), if you value FCFF, use the multiples that estimate the value of the firm, if you estimate the value of equity FCFE, use the equity multiples.