Assignment
Group course work 2017/2018
Applied Financial Management (60 marks)
1, Choose a stock of the company from London Stock Exchange and provide a brief introduction for
the selection of your stock. Download the previous 2 years daily prices of the stock and the market
index (FTSE100) and calculate the average return of the stock and market portfolio. Calculate the ß-
value of the stock using CAMPM and give a proper discussion of the risk of the stock. (Assuming
the risk free rate is 1%) (10 marks)
2. Prepare a proper report to the manager of the company related to strategic financial policy
decisions (capital structure /dividend policy). The manager is interested to see the effect of the
companies’ financial indicators on the financial strategic decisions. (50 marks)
After having the memo from the manager, the team’s leader had a meeting with all of you and said:
“You need to investigate the sample of UK companies for the period from 2011to 2016. Then, you
need to estimate a proper statistical model to investigate the determinants of capital
structure/dividend policy, in other words, to investigate factors that might have an impact on firms’
financial policies”
The team leader has empirically investigated a sample of UK firms, using STATA, and provided you
with the analysis below (see Appendix 1 and 2). You need to critically interpret the factors that might
have an impact on firms’ financial policy (capital structure /dividend policy) and give specific
suggestions to the company. The empirical model is based on literature, so you can compare these
results with the previous literature.
Requirements:
Write a report to critically analyse the tackled issue and how to interpret the results you have.
The report should include the following:
1. A proper justification of the importance of the selected financial policy (capital structure/
dividend policy)
2. A proper justification –critical discussion- of the theoretical underpinning of the selected financial
policy.
3. A proper justification of the selected variables in the model used. (You can develop proper
hypotheses for the investigated variables).
4. A critical discussion of the statistical findings and the suggestions you will give to the company.
The deadline for this project is Friday, 16 March 2018.
