Strategic Corporate Finance Assignment | Custom Essay Help

 

UGB363 Strategic Corporate Finance

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Individual assignment

 

Weighting – 100% of the marks for this module

 

This is an individual assignment of 3,000 words. (+ or – 10%) The hand in date is: 8th May 2020  29th May 2020

Students are required to submit their coursework through JIRA. Only assessments submitted   through   JIRA   will   be   marked.   Any   other   submission   including submission to your study centre in hard copy will be treated as a non-submission.

 

If your centre supports Turnitin©, a copy of your Turnitin© originality report must be submitted in conjunction with your assignment.

 

Requirements:

 

Part A of the assessment is compulsory for all students with a marking allocation of

50%  awarded  within  this  element.  Students  will  then  select  to  attempt  EITHER Part B or Part C of the assessment with this element of the work also being awarded a mark allocation of 50%.

 

 

The  assignment  has  been  designed  to  cover  the  following  learning  outcomes associated with successful completion of the module:

 

 

Knowledge

K1. Critical understanding of the key strategic decisions that a business may have to  make  and  appreciated  how  accounting  and  finance  can  assist  in  making  and evaluating those decisions.

 

 

K2. Critical understanding of specific analytical skills in key decision areas within strategy and finance at local and international level.

 

 

K3. Critical understanding of the limitations of the current state of financial theory in making strategic business decisions.

 

 

Skills

 

 

S1.  Competence  in  applying  the  key  valuation  concepts  and  methodologies  of financial decision making in order to contribute to the wider decision making of the organisation

 

 

Part A (compulsory)

 

You  have  recently  joined  the  investment  team  as  a  financial  analyst  at  Wisdom Wealth Consultancy Ltd.,  a financial  advisory  firm  based  within  Hong  Kong.  As  part  of  the  initial  duties  you  have been  asked  by  the  Board  of  Directors  to  investigate  the  five-year  performance  of  a SINGLE company that is currently listed on the Hong Kong Stock Exchange and forms part of the Hang Seng Index with the view to potentially investing future company funds into the chosen company:

 

 

 

Required:

 

 

Select a SINGLE company that is listed on the Hang Seng Index and prepare a report for the Board of Directors of Wisdom Wealth Consultancy analysing and evaluating the five-year performance of the chosen company.

 

 

In this section students should demonstrate both knowledge and understanding of a range of topics, theories, and concepts covered within the UGB363 Strategic Corporate Finance module. A report format should be utilized that offers clear, concise analysis, resulting in the production of robust recommendations. Topics and concepts that can be considered for inclusion  within  the  report  include  corporate  governance  policy,  financing  strategy, investment   strategy,   ratio   analysis   and   interpretation,   capital   structure   alterations, dividend  policy,  and  merger  and  acquisition  activity.  This  is  not  an  exhaustive  list  and students should be prepared to investigate other key aspects from the module if they feel necessary.

 

Total for Part A – 50 marks

 

 

Part B

 

(a). Company A has 8 million shares in issue and Company B 10 million. On day 1 the market  value  per  share  is  £20  for  A  and  £8  for  B.  On  day  2,  the  management  of  A decides, at a private meeting, to make cash takeover bid for B at a price of £12 per share. The takeover will produce large operating savings with a value of £60 million. On day 6, A publicly  announces  an  unconditional  offer  to  purchase  all  shares  of  B  at  a  price  of £12.00  per  share  with  settlement  on  day  20.  Details  of  the  large  savings  are  not announced and are not public knowledge. On day 12, A announces details of the savings, which will be derived from the takeover.

 

 

Required:

 

 

Ignoring tax and the time-value of money between days 1 and 20, and assuming the details given are the only factors having an impact on the share prices of A and B, determine the day 2, day 6, and day 12 share prices of A and B if the market is:

 

 

  1. Semi-strong form efficient, and
  2. Strong form efficient

 

 

In each of the following circumstances:

 

 

(i)      the purchase consideration is cash as specified above, and                (5 marks)

(ii)     the purchase consideration, decided upon on day 2, and publicly announced on day 6, is one newly issued share of A for each share of B.                 (5 marks)

 

 

(b). The Efficient Market Hypothesis states that “security prices fully reflect all available information” (Fama, 1991).

 

 

Required:

 

 

Critically  evaluate  the  previous  statement,  ensuring  the  response  is  supported  with relevant empirical evidence.                                                                         (40 marks)

 

 

In  this  section  students  should  demonstrate  an  understanding  and  knowledge  of  the theoretical  aspects  that  underpin  the  differing  strengths  of  market  efficiency.  The discussion  /  evaluation  should  be  supported  with  relevant,  contemporary,  academic research that has been undertaken within this field and should be referenced accordingly. Ensure  the  response  does  not  become  overly  descriptive  within  its  approach,  rather, attempt to incorporate a critical viewpoint throughout, allowing logical conclusions to be offered.

 

 

Total for Part B – 50 marks

 

Part C

 

The body of academic research provides conflicting evidence as to whether an optimal capital structure does indeed exist for individual companies and businesses. Demonstrating knowledge and understanding of the differing theoretical viewpoints associated with capital structure, and incorporating relevant empirical findings, critically evaluate and analyse whether financial managers can strive for an optimal capital structure.

 

 

In  this  section  students  should  demonstrate  knowledge,  understanding,  and  an  ability  to critically  evaluate  and  analyse  the  main capital structure relevance  and  irrelevance  theoretical viewpoints.  The  response  should  be  developed  through  use  of  a  wide  range  of  relevant academic  literature,  referenced  as  per  Harvard  referencing  requirements. 

Total for Part C – 50 marks

 

Generic Assessment Criteria – Undergraduate Bachelor’s degree

Categories

 

Grade              Relevance                          Knowledge                           Analysis                          Argument and Structure                    Critical Evaluation                   Presentation                         Reference to Literature

86 –                 The work examined is exemplary and provides clear evidence of a complete grasp of the knowledge, understanding and skills appropriate to the Level of the qualification. There is also unequivocal evidence

100%

showing that all the learning outcomes and responsibilities appropriate to that Level are fully satisfied. At this level it is expected that the work will be exemplary in all the categories cited above. It will demonstrate

a particularly compelling evaluation, originality, and elegance of argument, interpretation or discourse.

 

76-85%            The work examined is excellent and demonstrates comprehensive knowledge, understanding and skills appropriate to the Level of the qualification. There is also excellent evidence showing that all the learning outcomes and responsibilities appropriate to that level are fully satisfied. At this level it is expected that the work will be excellent in the majority of the categories cited above or by demonstrating particularly compelling evaluation and elegance of argument, interpretation or discourse and there may be some evidence of originality

 

 

70 –

75%

The work examined is of a high standard and there is evidence of comprehensive knowledge, understanding and skills appropriate to the Level of the qualification. There is also clearly articulated t evidence demonstrating that all the learning outcomes and responsibilities appropriate to that level are satisfied At this level it is expected that the standard of the work will be high in the majority of the categories cited above or by demonstrating particularly compelling evaluation and elegance of argument, interpretation or discourse.

 

 

 

 

60 –

69%

Directly relevant to the requirements of the assessment

A substantial knowledge of relevant material, showing a clear grasp of themes, questions and

issues therein

Good analysis, clear and orderly

Generally coherent and logically structured, using an appropriate mode of argument and/or theoretical mode(s)

May contain some distinctive or independent thinking; may begin to formulate an independent position in

relation to theory and/or

Well written, with standard spelling and grammar, in

a readable style with acceptable format

Critical appraisal of up-to-date and/or appropriate literature. Recognition of different perspectives.Very good use of

source material. Uses a range of

 

 

Some attempt to                 Adequate knowledge of a

Some analytical               Some attempt to construct                 Sound work which                     Competently                         Uses a variety of literature which

 

address the requirements of

fair range of relevant material, with intermittent

treatment, but                  a coherent argument, but                   expresses a coherent               written, with only may be prone to               may suffer loss of focus                     position only in broad                minor lapses from

includes some recent texts and/or appropriate literature, though not

 

 

50 –

59%

the assessment: may

drift away

evidence of an appreciation of its

description, or to

narrative, which

and consistency, with issues at

stake stated only

terms and in uncritical

conformity to one or

standard grammar, with

acceptable

necessarily including a substantive amount beyond library texts.

 

from this in less                                                                lacks clear                        vaguely, or theoretical                        more standard views                 format

significance

Competent use of source

 

focused passages                                                           analytical

purpose

mode(s) couched in simplistic

terms

of the topic

material.

 

 

 

40 –

49%

Some correlation with the requirements of the assessment but there are instances of

irrelevance

Basic understanding of the subject but addressing a limited range of material

Largely descriptive or narrative, with little evidence of analysis

A basic argument is evident, but mainly supported by assertion and there may be a lack of clarity and coherence

Some evidence of a view starting to be formed but mainly derivative.

A simple basic style but with significant deficiencies in expression or format that may pose

obstacles for the reader

Some up-to-date and/or appropriate literature used. Goes beyond the material tutor has provided. Limited use of sources

to support a point.

 

 

Relevance to the                A limited                               Heavy                               Little evidence of coherent                 Almost wholly                           Numerous                             Barely adequate use of literature.

 

requirements of                  understanding of a               dependence on                argument: lacks                                 derivative: the writer’s               deficiencies in

Over reliance on material provided

 

 

35 –

the assessment may be very

narrow range of material      description, and/or on

development and may be repetitive or thin

contribution rarely goes beyond

expression and presentation; the

by the tutor.

 

39%

intermittent, and may

be reduced to its vaguest and least challenging terms

paraphrase, is common                                                              simplifying

paraphrase

writer may achieve

clarity (if at all) only by using a simplistic or repetitious style

 

The evidence provided shows that the majority of the learning outcomes and responsibilities appropriate to that Level are satisfied – for compensation consideration.

 

 

30 –

34%

The work examined provides insufficient evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence provided  shows that some of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in some of the indicators.

 

15-29%            The work examined is unacceptable and provides little evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence shows that few of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in several of the indicators.

0-14%              The work examined is unacceptable and provides almost no evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence fails to show that any of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in the majority or all of the indicators.

 

 

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