• Assessment item 3
Case Study
Value: 20%
Due date: 06-May-2015
Return date: 27-May-2015
Submission method options
Hand delivery (option applies to Internal only)
Alternative submission method
Task
You are an investment advisor. Based on your own market research on AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED and BHP BILLITON LIMITED, you are required to recommend to your customer which of the companies’ ordinary shares is better value for money? In your recommendation, include all the calculations and market information on which your recommendation is based. You may also include the assumptions which you made about your customer’s financial situation when recommending purchase of the below company’s shares i.e. short and long term goals etc.
For this question use the Yahoo! Finance website at http://au.finance.yahoo.com/ and other websites for data.

Calculate the following to help you come up with a recommendation as a minimum:

• Find the monthly holding period returns (%) for the period 1 October 2013 – 30 September 2014 for AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, BHP BILLITON LIMITED and the market proxied by the All Ordinaries index. The monthly holding period return is the percentage return (%) you would receive if you bought an asset on the first day of the month (opening price) and sold it on the last day of the month (closing price). Graph your results on one graph with returns on the Y axis and time on the X axis. (Use 'Close' rather than 'Adjusted Close' for the selling price and ignore any dividends.)

• Calculate the required rate of return on ordinary shares of the above two companies.

• Calculate ordinary share valuation – single holding period for both the above companies.

Note: Headings in the marking rubric needs to be addressed.