TAKE-HOME TEST SP 5, 2013

Take-Home Test SP2, 2015

ANSWER SHEETS
Course Name
Student ID

BANK 1005 - Financial Markets and Institutions

Surname/
Last name

Given name(s)/
First name

Please record the make and model of

your financial calculator here

Make

Model

Tutorial session you normally

would attend or are enrolled in

Day of
week

Time
Room

Deadline:
Test available Wednesday, 08 April 2015 at 10.00 am
Test due Thursday, 09 April at 14.00 (02.00 pm) Adelaide time according to UniSA
systems
Aim for 12.00 noon as no late submissions will be accepted.
Read the instructions on the Take-Home Test document.
Submission of these Test Answer Sheets
1. These Test Answer Sheets are provided separately in Word format for you to type your
answers. You can expand (or reduce) the areas provided on these sheets, if needed but
the spaces provided should be adequate for your answers.
2. Submit your Test Answer Sheets, as ONE DOCUMENT, in PDF format which will best
maintain your formats using the Gradebook/Learn-online facility. (Word format will be
accepted in the rare case that you are unable to do the conversion but your document will
be marked with the formatting as it can be printed and/or viewed by the marker).
To convert a Word document to PDF, simply save your document as a PDF file. This facility
is available in Microsoft Word (as a part of the Save As Type function).
No direct submissions to the lecturer or tutors will be accepted and any such
submissions will not be marked.
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3. Do NOT submit the Take-Home Test paper. Do NOT include the questions in the Test
Answer Sheets submit your answers only.
4. By submitting these Answer Sheets with your name/ID, you will be deemed to
acknowledge that this is entirely your own work and no assistance was sought from
any other person in any form.
5. Type your name and student ID number in the box on the top page of the Test Answer
Sheets. In addition, insert your full name and student ID in the footer of these Test Answer
Sheets - an example of the footer, if one is needed, is the footer on these Test Answer
Sheets.
Identify your tutorial session in the box at the top of this page show the day and start time.
6. Extensions, re-marking and re-submissions are NOT available for this assessment.
7. Any questions about this test will not be answered as this work is for you to do on
your own. So, please work with what you have been presented here in the best way that
you can.
Assistance from the tutors, lecturer and Help Desk is NOT available.

YOUR NAME:

ID:

BANK1005 Financial Markets and Institutions

TAKE-HOME TEST SP 2, 2015
ANSWER SHEETS

Page 1 of 4

SECTION ONE
MULTIPLE CHOICE QUESTIONS
Type the letter that corresponds to your choice of the best answer for each question
in the answer box below next to the respective question number.
Question
Number
1

YOUR NAME:

Your Answer
D

ID:

BANK1005 Financial Markets and Institutions

TAKE-HOME TEST SP 2, 2015
ANSWER SHEETS

Page 2 of 4

SECTION TWO
SHORT QUESTIONS

Question 1
(a) Dividend yield
Dividend Yield = Dividends per share/Initial Price = (1722.7/1248.0)/35.66 = 3.87%

(b) P/E ratio

Earnings per share = 2458.4/1248 = $1.97 per share
P/E = Price per share/Earnings per share = 35.66/1.97 = 18.10

(c) Market capitalisation

Market Capitalization = Current Stock price x Shares outstanding
Market Capitalization = 35.66 x 1248 = $44503.68 m

YOUR NAME:

ID:

BANK1005 Financial Markets and Institutions

TAKE-HOME TEST SP 2, 2015
ANSWER SHEETS

YOUR NAME:

ID:

Page 3 of 4

BANK1005 Financial Markets and Institutions

TAKE-HOME TEST SP 2, 2015
ANSWER SHEETS

Page 4 of 4

Question 2
Part A
The market for any particular stock is found to be liquid when the shares can be
quickly sold and hence, the act of selling has not that much influence on the price
of stock. However, there are many factors that can assist in a positive shift in the
stocks liquidity. The first one can be related to inflation which leads to a positive
valuation of the stock and hence it will lead to low multiples. Another general factor
according to me would be the belief in the intrinsic stock value as this would results
in such transactions that would include executive insider transactions. They are
often driven or prescheduled by a portfolio. With the above two mentioned factors,
it can be said that when there is an inflation, then it is an obvious fact that the price
of shares would go up and hence it would definitely result in the market liquidity.
More than this, when there is a self belief in the nature of the stock that the price will
rise later onward, then the buyer will not take much time in buying it and hence, this
could also lead to buying and selling of the stock quickly.

YOUR NAME:

ID:

BANK1005 Financial Markets and Institutions

TAKE-HOME TEST SP 2, 2015
ANSWER SHEETS

Page 5 of 4

Question 2
Part B
The relationship between owners and management of the company in context of the company
can be described in such a way that managers have the responsibility to drive the
shareholders value and maximize their wealth. However, shareholders invest their funds
within the company and expect a high yield from their investment. But the managers working
there pretend to work for the benefits of the shareholders and in reality, they work for their
own personal interests and benefits. An example of this can be related to the fact that there
are several conflicts of interests that can influence the decisions of managers to act in the
interests of shareholders and the management can buy other companies to expand power
which is an example. The managers could manipulate financial figures while venturing onto
fraud so that bonuses can be optimized along with stock price related options. The advocates
of the governance should generally encourage the corporations to give priority to the rights of
shareholders and assist shareholders as to learning how and where the rights could be
exercised. Transparency and disclosure are interwined with such objectives and goals.

YOUR NAME:

ID: