FIN305e
End-of-Course Assessment – July Semester 2014
Financial Markets and Instruments
__________________________________________________________________________________________
INSTRUCTIONS TO STUDENTS:
1. This End-of-Course Assessment paper comprises NINE (9) pages (including the cover page).
2. You are to include the following particulars in your submission: Title, Your PI, Your Name, and Submission Date.
3. As the End-of-Course Assessment is in lieu of an examination, late submission will NOT be accepted by the University.
IMPORTANT NOTE
ECA Submission Deadline: 29 October 2014, 12 noon
ECA Submission Guidelines
Please follow the submission instructions stated below:
A - What Must Be Submitted
You are required to submit the following THREE (3) items for marking and grading:
• A Report (you should submit this item first as it carries the highest weightage).
• A Video Presentation: o UniSIM conducts Walk-in Clinic Sessions on how to record ECA video presentation for SBIZ students every semester. Please see MyUniSIM Blackboard L01 group for details.
o ECA video recording and submission online tutorials/guides are also available in MyUniSIM Blackboard at the FAQs tab under the category “Submitting End of Course Assessment [ECA]”.
• The set of Powerpoint slides upon which the video presentation is based.
Please verify your submissions after you have submitted the above THREE (3) items.
B - Submission Deadline
• The THREE (3) items of Report, Video and Presentation Summary are to be submitted by 12 noon on the submission deadline.
• You are only allowed a ONE-TIME submission for each of the THREE (3) items.
• As the ECA is in lieu of an examination, late submission of any of the THREE (3) items will NOT be accepted by the University.
• It will be taken that you have withdrawn from the course if o you failed the ECA due to late and/or non-submission of any of the THREE (3) items.
o the Report is not submitted on time.
C - How the (3) Items Should Be Submitted
• The Report: submit online to MyUniSIM (Blackboard) via TurnItIn (for plagiarism detection)
• The Video: submit online to MyUniSIM Blackboard (refer to MyUniSIM Blackboard at the FAQs tab under the category “Submitting End of Course Assessment [ECA])
• The Presentation Summary: submit online to MyUniSIM (Blackboard) (TurnItIn submission not required)
• Avoid using a public WiFi connection for submitting large video files. If you are using public wireless (WiFi) connection (e.g. SG Wireless at public areas), you might encounter a break in the connection when sending large files.
D - Additional guidelines on file formatting are given as follows:
1. Report • Please ensure that your Microsoft Word document is NOT of the type .docx as this is generated by Microsoft Word 2007 or higher version and it is NOT readable by earlier versions of Microsoft Word.
•
If you are using Microsoft Word 2007 or higher version, kindly ensure that you save your Report in .doc format so that your marker can read your Report.
2. Video Showing your powerpoint projection in the background is NOT required.
Your video file should be readable by current video player applications such as Windows Media Player and QuickTime Player.
Do ensure that your video file conforms to these requirements:
a) Time Duration: a minimum of 3 minutes and a maximum of 6 minutes
b) File Size: No more than 50MB
c) File Formats:
• .wmv (recommended)
• .mov
If we are unable to view your video file, we will treat it as nonsubmission of the video component.
Note: Please refer to the FAQs in MyUniSIM Blackboard under the category “Submitting End of Course Assessment [ECA]” for the following online tutorials/guides:
a) MyUniSIM Blackboard ECA Submission
b) Windows Movie Maker.
Under the sections “Online Tutorials”, computer-based training are available on how to use Windows Movie Maker to record ECA presentation video on your PC.
3. Presentation Summary • Please ensure that your Powerpoint slides are NOT of the type .pptx as this is generated by Microsoft Powerpoint 2007 or higher version and it is NOT readable by earlier versions of Microsoft Powerpoint.
•
If you are using Microsoft Powerpoint 2007 or higher version, kindly ensure that you save your Powerpoint slides in .ppt format so that your marker can read your Powerpoint slides.
•
The maximum number of slides is fifteen (15).
• Please do NOT download and use PPT slide design templates from the Internet.
E – Please be Aware of the Following:
Submission in hardcopy or any other means not given in the above guidelines will not be accepted. You do not need to submit any other forms or cover sheets (e.g. form ET3) with your ECA.
You are reminded that electronic transmission is not immediate. The network traffic may be particularly heavy on the date of submission deadline and connections to the system cannot be guaranteed. Hence, you are advised to submit your work no later than the day before the date of submission deadline. MyUniSIM (Blackboard) will allow you to submit your work late but your work will not be marked. You should therefore not jeopardise your course result by submitting your ECA at the last minute.
Once you have submitted your ECA, the status is displayed on the computer screen.
Any extra files, missing appendices or corrections received after the cut-off date will also not be considered in the grading of your ECA.
F - Plagiarism and Collusion
Plagiarism and collusion are forms of cheating and are not acceptable in any form in a student’s work, including this ECA. Plagiarism and collusion are taking work done by others or work done together with others respectively and passing it off as your own. You can avoid plagiarism by giving appropriate references when you use other people’s ideas, words or pictures (including diagrams). Refer to the APA Manual if you need reminding about quoting and referencing. You can avoid collusion by ensuring that your submission is based on your own individual effort.
The electronic submission of your ECA will be screened by a plagiarism detection software. For more information about plagiarism and collusion, you should refer to the Student Handbook (Section 5.2.1.3). You are reminded that UniSIM takes a tough stance against plagiarism or collusion. Serious cases will normally result in the student being referred to UniSIM’s Student Disciplinary Group. For other cases, significant mark penalties or expulsion from the course will be imposed.
Video Presentation Evaluation Criteria
Note: Students will be assessed on the quality of the presentation and not the quality of the video recording. However, the recording is expected to have video and audio clarity. Showing your powerpoint projection in the background is NOT required.
Organisation of Presentation /8
•
Logical flow of presentation
• Posture: Standing, straight back etc…
• Body language:
– Hand gestures supporting oral arguments, etc…
Posture & Body Language /5
• Looking at the video camera
•
No reading of slides or notes or cue cards
Eye-Contact /5
Pace & Articulation /7
• Pace: Speaks neither too fast nor too slow
• Articulation: Oral expression is clear and confident in the presentation.
TOTAL /25
Presentation Summary Evaluation Criteria
•
Layout, clarity of text elements, colour blends, graphical enhancements
Format and Style of Slides /3
•
Proper flow - title page, introduction, body, results, recommendations / discussion points, conclusion/summary; quick to understand, free from grammatical errors
Clarity and Coherence /4
Creativity
• Ability to use creative elements to value-add to the presentation so as to enhance understanding and clarity of difficult concepts
TOTAL /10
SECTION A (Total 65 marks)
Question 1
It is now 01 July 2014. Four years ago on 01 July 2010, you purchased a S$1.5-million luxurious condominium apartment at Paris Ris. As it was a new development, the apartment was then valued at the purchase price of S$1.5 million. You financed the purchase with your savings of S$300,000 (both cash and CPF) and a 20-year mortgage loan at a fixed interest rate of 3.5% per annum from DBS Bank. At a maximum Loan-to-Value (LTV) ratio of 80% allowed by the Monetary Authority of Singapore (MAS) at that time, DBS Bank could only extend you a maximum loan quantum of S$1.2 million. [Note: Stamp duty, legal and other fees have been omitted from this question for simplicity.]
(a) Discuss the term Loan-to-Value (LTV) ratio and its purpose from the perspectives of both the lender (i.e. the bank) and the financial regulator (i.e. the MAS). What is the current LTV ratio applicable to first-time buyer of private property for owneroccupation?
(6 marks)
(b) Calculate your annual mortgage installment payment, prepare a mortgage amortisation table for the past four years and then answer the following questions:
(i) Calculate the total amount of interest you have paid in the last 4 years, and the amount of mortgage loan outstanding as at 01 July 2014.
(ii) Discuss the term “home equity” or “homeowner’s equity”. Calculate your home equity in the apartment as at 01 July 2014, expressed as percent of the apartment’s valuation assuming that it has appreciated by 10% since you bought it on 01 July 2010.
(9 marks)
[Word Limit: Maximum of 600 words]
Question 2
Please refer to the MAS announcement on the results of auction of 20-year Singapore Government bond dated 28 August 2013:
(a) Explain the issuance procedure for Singapore Government Securities (SGS). Your explanation should include a discussion of:
• The agents involved and their roles
• The application procedure, in particular distinguishing between competitive and non-competitive applications
• The allocation procedure, in particular on determination of the bond’s coupon rate and the price successful bidders pay
Examine and discuss the reasons for issuance of SGS in light of the Singapore Government’s conservative and prudent fiscal policy and, hence, its consistent budget surpluses over the years.
(12 marks)
(b) Subsequent to issuance of the 20-year SGS bond, its yield to maturity (YTM) declined to 3.0% p.a. on 01 September 2014. Calculate the price of the bond and explain why an investor would pay a premium for the bond.
(3 marks)
[Word Limit: Maximum of 800 words]
Question 3
Your company has contracted to buy an equipment from the US costing US$265,000. The equipment is due to arrive in 6 weeks’ time, when payment in US dollars will be effected. The current exchange rate is US$1 = S$1.2600, but the US dollar is expected to appreciate to US$1 = S$1.28. Your boss has tasked you to look into managing the foreign exchange (FX) risk of this transaction. Analyse the characteristics of the forward exchange market and currency futures market for managing FX risk, and present to your boss the advantages / disadvantages of each market, including their main uses. [You may find it useful to set up a table of comparison between the two instruments.]
(10 marks)
[Word Limit: Maximum of 400 words]
Question 4
Examine the history of the European Monetary Union (EMU) and answer the following questions:
(a) Provide a short account of how the Euro came into existence.
(4 marks)
(b) Discuss the pros and cons of the single currency.
(5 marks)
(c) In light of the European Sovereign Debt crisis which is still being resolved, discuss the problems or challenges of EMU and why it may not be an optimum currency area. [You may find it instructive to compare EMU with the United States of America, which is a political, economic and monetary union of 51 states.]
(6 marks)
[Word Limit: Maximum of 800 words]
Question 5
Analyse the characteristics and stocks and bonds. In what major ways do stocks differ from bonds? Explain the main reasons why some companies choose to list in foreign stock exchange in addition to the domestic stock exchange.
(10 marks)
[Word Limit: Maximum of 400 words]
SECTION B (Total 25 marks)
Prepare a video recording of your response to Question 2. Your presentation should be of at least 3 minutes but not exceeding 6 minutes.
(25 marks)
SECTION C (Total 10 marks)
Prepare a set of Powerpoint slides upon which the video presentation is based.
(10 marks)
----- END OF ECA PAPER -----