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Financial Markets Function : AMP and CBA

   

Added on  2021-01-01

12 Pages3320 Words248 Views
Finance
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Banking and Finance
Financial Markets Function : AMP and CBA_1

Table of ContentsINTRODUCTION...........................................................................................................................1PART A...........................................................................................................................................11.Current price of ordinary/ common shares in AMP and CBA and their evolution..................12. Royal Commission inquiring into financial institutions like CBA and AMP.........................3PART B............................................................................................................................................41. Distinguish between required rate of return and internal rate of return..................................42. Determine the net present value of both projects and its interpretation..................................53. Internal rate of return of both projects....................................................................................64. Changes in IRR and NPV, if required rate of return decreased to 10%..................................75. Recommendation regarding favourable investment proposal.................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
Financial Markets Function : AMP and CBA_2

INTRODUCTIONBanking and Finance refer as a term of money management by investing in either banksor other financial institutions. Banking is services offered by a bank whereas finance meansmanagement of money by government or large financial companies. This project report is based on financial markets function. Assignment is consist of twoparts. Part A, focus on analysis of financial instruments of two companies i.e. AMP andCommonwealth Bank of Australia (CBA) and Part B, evaluate the fundamentals of capitalbudgeting (Richards, 2012).PART A1.Current price of ordinary/ common shares in AMP and CBA and their evolutionAMP is a company comes under financial sector listed in ASX. It's headquarter inSydney, Australia. It deals in various financial services such as investment, financial, insuranceadvice & banking products includes saving accounts and home loans. CBA is an Australian multinational bank comes under banking and financial sector listedin ASX. It provides several financial services like business, institutional banking, fundsmanagement, insurance, broking and investment services. The current share price of AMP Limited and Common Bank of Australia shares are 3.12and 71.10 AUD respectively. AMP share price are analysed and its evolution share price per book value for past 5-years are shown below:Valuation of Share price/BookYearShare price20142.9320152.3920162.5320173.9420183.61
Financial Markets Function : AMP and CBA_3

Interpretation: AMP share price per book value is highest in 2017 i.e. 3.94 from pastfive years. 2.93, 2.39, 2.53, 3.94 and 3.60 are the share price for the years 2014, 2015, 2016,2017 and 2018 respectively (Venardos, 2012). Company's share price increasing from 2015 to2017 because of support of internal stakeholders. When a company introduces a new product orservice. Trust and goodwill of automatically increases which attract more customers. It positivelyimpact on company's operation and growth. By this AMP share price increases and it attractmore stakeholders.CBA share price are also analysed and its evolution share price per book value for past 5- yearsare shown below:Valuation of Share price/BookYearShare price20142.8420152.7820162.3520172.2320181.8822014201520162017201800.511.522.533.544.52.932.392.533.943.6Share price
Financial Markets Function : AMP and CBA_4

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