Guidance on Financial Economics BUSI3106 coursework

Individual coursework

Deadline: 15:00, 5th December 2024

Submission: Online submission on the Moodle Please note:

. Late submission will receive penalty on awarded marks. No submission will receive a mark of zero.

. Only Coursework submitted on Moodle will be marked.

Choose a non-financial firm listed in the Chinese stock market and analyze its risk and return profile. The Capital Asset Pricing Model (CAPM) must be used for the analysis. Comment on whether you would

recommend this stock to a Chinese investor in his mid-fifties who has most of assets in state-owned

bank deposits in his asset portfolio.

1.  Structure

•  A brief introduction (on the selected company etc.) •  The CAPM, data, estimation results (needs to be accurate and precise) •  Other supporting evidence (this section is quite open)

o  As  the  CAPM  focuses  on  the  systematic  market  risk,  perhaps  the other supporting evidence would focus on 1) other systematic risk, nonsystematic risk, or no risk at all

o  It can cover the macro-economy, business cycle, industry, financial statements and ratios, the management team, and the list goes on

•  Recommendation

o  The Chinese investor is in his mid-30’s and who has only risk-free assets in his asset portfolio. Assumptions on his profile need to be reasonable,  e.g,  stable  income  and  job,  considerable  savings  for investment, etc.

2.  Data and estimation

•  Summarize the data (mean, standard deviation and etc.) •  Explain (in a few sentences) why you    choose the particular data frequency and sample period •  Explain  (in  a  few  sentences)  why  you choose  the  particular  stock  market index •  Discuss the regression results and their financial interpretation

3.  Miscellaneous issues

• a  well-written  essay  of  1200~1300  words would be just as nice

•  No need to provide many references, as the coursework is an application of the CAPM followed by your own analysis

•  Whether you recommend the stock or do not recommend the stock will not afect the grade

•  No need to append the data to the coursework

•  Any  tables  /  figures  must  be  nicely  formatted;  also  check  writing  and grammatical mistakes – there is a penalty for sloppy presentation and poor writing

Individual coursework Deadline: 15:00, 5th December 2024 Submission: Online submission on the Moodle

Late submission will receive penalty on awarded marks. No submission will receive a mark of zero. 2

Choose  a  non-financial  firm  listed  in  the  Chinese  stock  market  and  analyze  its  risk  and  return profile.  The Capital  Asset  Pricing  Model  (CAPM)  must  be  used  for  the  analysis.  Comment  on whether  you  would recommend  this  stock  to  a  Chinese  investor  in  his  mid-fifties  who  has  most of  assets  in  state-owned  bank deposits in his asset portfolio.

Guidance to coursework

The coursework is based on your understanding of the course materials and the analysis of the topic. The use of market data and pricing model must be correct, and your explanation and analysis of the findings, as well as references from the literature is equally important.

A word count for the complete document (except references) must be provided. Please use Times New Roman font size 12 and 1.5 line spacing. All pages (and equation if any) must be numbered. You may also provide appendices at the end of the coursework, which are not included in the word count and will not necessarily be considered for marking.

Materials taken from external sources and used in the coursework must be clearly referenced and they  should not constitute too large a proportion of your coursework.

Marks  will  be  awarded  for  correct  computation,  clarity  in  analysis,  and  coherence  in  the investment recommendation. In choosing the firm, please do not select stocks in the banking and the finance sector.