Australian Financial Market Structure

Analysis of Australian Financial Market 2 2.1 Australian Financial Market Structure 2 2.2 Financial Services of investors in Australia 3 2.3 Tools of Capital Budgeting in Australia 3 2.4 Analysis of Australian Share Market 5 2.5 Analysis of the Australian Share market 6 2.6 Potential Performance Industry of the financial market 8 3. Analysis of Australian Financial Market Australian Financial Market Structure The Australian security market has been effective since the commencement from the early 1980s where the trading is conducted based on the currency which is the Australian Dollar.

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BUSINESS FINANCE
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Table of Contents
1. Introduction.........................................................................................................................2
2. Analysis of Australian Financial Market............................................................................2
2.1 Australian Financial Market Structure........................................................................2
2.2 Financial Services of investors in Australia................................................................3
2.3 Tools of Capital Budgeting in Australia......................................................................3
2.4 Analysis of Australian Share Market..........................................................................5
2.5 Analysis of the Australian Share market.....................................................................6
2.6 Potential Performance Industry of the financial market..............................................8
3. Conclusion........................................................................................................................11
References................................................................................................................................12
Appendices...............................................................................................................................14

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1. Introduction
The assignment is related to the entity which is the BD business solution. In the
conducted study the analysis of the Australian financial market and the inherit types of
market which is involved in that case. The financial markets in Australia have been depicted
in the assignment along with the financial information which are available to the potential
investors in Australia. The limitation in the foreign investment in the Australian security
market have been portraited in the research study with the other factors which are associated
with it. Some of the popular tools which are used in the capital budgeting system in Australia
along with the key components which are the investment criteria and its advantages and
disadvantages. The key analysis which is conducted in this study is further depended on the
analysis of the Australian Bond market and Australian Share Market with the potential
investments in the financial sectors of the chosen entity.
2. Analysis of Australian Financial Market
2.1 Australian Financial Market Structure
The Australian security market has been effective since the commencement from the
early 1980s where the trading is conducted based on the currency which is the Australian
Dollar. All types of currency including the swaps and the derivative trading in the security
market have been conducted by the Australian security market. There were actually various
types of transaction which actually took place are the outright spot, outright forward and
swap. There actually exist the other types of the counterparty which are the customers, other
resident dealers and the overseas bank which are involved in this case (Hirshleifer 2015).
Apart from that the various types of the Australian market are the debt market which
includes the short-term debt securities and long-term debt securities. Derivates market and

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equity market are another two market which actually takes place among the various financial
market in Australia. The financial institutions which are involved in that case are the
Australian banks which are involved in all sorts of derivatives and hedging related
transactions which actually takes place in the business. The market regulator in Australia is
Australian Securities and Investment Commission (ASIC). ASIC has the accountability
towards the integrity towards the regulation of the investment banks and the consumer
protection related to the investments which actually takes place in the security market (Soros
2015).
2.2 Financial Services of investors in Australia
Before making investment in the financial market the potential investor in that case must
go through the annual report of the entity. In order to make investment it is quite important
for the investor to approach the one of the top financial institution who’s the revenue or the
financial statement of that financial institution is effective (Arcand, Berkes and Panizza
2015). But the negative aspects which really work in this case is that in case of the huge
return the investors in that case have pay lump sum amount of tax. Most of the potential
investors have their own strategy of making investment in the financial market. Based on the
stats it is found that most of the investors in most of the facts tries to avoid the tax in such a
situation it becomes quite obvious that the investors in that case will further try to avoid the
financial institution which actually involves huge tax burden.
2.3 Tools of Capital Budgeting in Australia
There are various capital budgeting tools which are involved in that case which are the
payback period, discounted payback period, net present value of the business, internal rate of
return and probability index which actually are some of the capital budgeting techniques
which is used by the BD solution limited regarding the acceptance or the rejection of the
project of the entity (Shoup 2017). The capital budgeting tools help the board of directors of

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the entity to take the right decisions for the enhancement of the current position of the
business.
In case of the project evaluation the investment criteria which is basically opted by the
entity is long term in nature. The decision actually based on the viability of the project and
the long term business activity. The project of the business is only viable if the net present
value of the higher and positive in comparison to the other similar projects in that case. There
are actually some of the major advantages and disadvantages which is further involved in that
case which are depicted bellow while understanding the criticality of the projects while
undertaking it in Australia:
Advantages:
 The process which is included in the capital budgeting techniques in the Australian
companies includes the risk and its effect along with the investment opportunities.
 At the time of making the potential investment it is quite important for the entity to
make the investments on that particular projects (Levy and Akeb 2016).
 The enhancement in the shareholders wealth must be taken into deliberation by the
entity which involves the effective control over expenditure which actually involves
the depreciation and the other cost which is involved in this case.
 The decision in the capital budgeting actually involves the investment which will
enhance the overall value of the entity. The management in that case takes the major
decisions at the time of investing and the underinvesting of the projects which is
involved in that case.
Disadvantages:

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 Most of the decision which is taken by the business is simply based on the long term
aspects of the concern and are quite irreversible in nature.
 There actually certain risk which are the involved in the process which further means
that the techniques in that case are assumed and further are not real in nature.
 A single miscalculation in the process will affect the long term durability of the
project which is involved in the business of the entity.
 The skilled professional in such analysis and interpretation of the project is not quite
viable based on some of the significant business performance.
 The investment and the time which essentially takes place within the business of the
entity in that case is quite important.
In Australia the more popular budget which is involved is the evaluation technique which
is Net Present Value of the entity. It is actually the most widely used techniques in Australia
where most of the companies applies the concept at the time of the budgeting technique
which is used in that case. The other budgeting technique in that case is not used by the entity
along with the other facets which is related in that case (Myers 2019).
2.4 Analysis of Australian Share Market
In the Australian debt market, there are actually various kinds of the Australian debt
market which is actually involved in this case which are the commonwealth government
securities in Australia along with the various types of bonds which is involved in that case.

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The various types of bonds which are actually involved in that case are the treasury fixed
bonds which involves the main three components which are the face value, semi annually
coupons and yield of maturity of the entity (De Grauwe and Grimaldi 2018). Another type of
bond which is actually used in this case are the treasury indexed bonds which is used by the
entity in order to measure the inflation or the consumer price index of the entity. The treasury
notes in that case are further dealt with the government currently issues which are associated
with the business of the entity.
Apart from these there are corporate bond which is associated in that case are the
corporate bond which actually includes the bonds related to the long term and short-term debt
of the entity (Bell, Bryman and Harley 2018). The derivative market which is actually
involved in this case are the treasury bond in terms of the future contracts, interest rate swaps
in the business and repurchase agreement which actually takes place within the business of
the entity. The settlement system in the business while making the major investments in this
case actually involves one of the major decision-making process regarding such kind of
investments in the process of the entity. The Australian bonds are basically related to the
government bonds which is mostly purchased by the financial institution which is involved in
such a situation.

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The basic difference between the yield to maturity and the rate of return of the bond in
that case is actually related to the potential return in the bond of the entity. Whereas on the
other hand the coupon rate in that case are further based on the earning which the investors of
the entity actually expect to receive after the particular hold of the bond in that case. The
return of the bond after the particular maturity period is known as the YTM of the bond.
2.5 Analysis of the Australian Share market
The historical graph of one of the top ASX listed entity has been depicted in the
conducted study which is the AGL energy ltd is referred to as the utility entity which is
actually situated in Australia. The rules and regulations of the entity is further based on the
ASIC enlisted norms which is actually followed by the potential investors in the market of
the entity.
Based on the market capitalization strategy in case of this entity which is the AGL
energy limited it can be interpreted that the due to the environmental and the political factors
there are actually huge fluctuations in the share price of the entity. This type fluctuation in the
business actually provides clear idea regarding the stable improvement in the political and the
social factors in the business of the entity. The trend of the financial performance is quite

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optimized and stable where the business of the entity on the other hand is constantly
increasing based on the trading in the market share of the entity (Daxhammer and Facsar
2017).
The above computed graph actually suggest that the business prospects of the entity based
on the certain business parameters are actually involved. The decisions of the management in
this case creates impact on the business prospects of the entity. The major decision of the
entity is further depending on the present and the past financial performance of the entity
which is depicted in the financial report or rather the financial statements of the entity
(Minsky 2016). Due to the increase in the economic factors of the country it is quite clear
that such improvement will automatically enhance the overall productivity or rather the GDP
of the country in the future.
2.6 Potential Performance Industry of the financial market
Based on the different industry the performance indices have been represented based on
the industry performance for the last 5 years in case of the different sectors:
ASX all Ordinary Golds indices
ASX 200 A-REIT (AUD) indices

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ASX 200 Consumer Discretionary (AUD) indices
ASX 200 Health Care indices

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ASX 200 Industrials (AUD) indices
ASX 200 Information Technology (AUD) indices

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3. Conclusion
From the above discussion it can be concluded that the financial market and the current
position of the country which is Australia is analyzed in a detailed manner in the conducted
research along with the other aspects which is associated with it. The various types of bonds
which is actually used in this case are further taken into consideration by the entity along with
the other aspects which is associated in that case. The share market regulatory and the various
types of capital budgeting techniques which must be adopted by the entity have been depicted
in the conducted study accordingly. Some of the significant steps in that case must be adopted
by the business at the time of the startup which is based on the past and the current economic
situation of the country which is Australia in the conducted research study in this case.

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References
Arcand, J.L., Berkes, E. and Panizza, U., 2015. Too much finance?. Journal of Economic
Growth, 20(2), pp.105-148.
Bell, E., Bryman, A. and Harley, B., 2018. Business research methods. Oxford university
press.
Daxhammer, R.J. and Facsar, M., 2017. Behavioral finance. UVK Verlagsgesellschaft mbH.
De Grauwe, P. and Grimaldi, M., 2018. The exchange rate in a behavioral finance
framework. Princeton University Press.
Fisher, R.C., 2018. State and local public finance. Routledge.
Gitman, L.J., Juchau, R. and Flanagan, J., 2015. Principles of managerial finance. Pearson
Higher Education AU.

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Hirshleifer, D., 2015. Behavioral finance. Annual Review of Financial Economics, 7, pp.133-
159.
Levy, A. and Akeb, H., 2016. Market Efficiency and Behavioral Finance: non correlation
between Risk-Profitability on Antipodal Markets.
Minsky, H., 2016. Can it happen again?: Essays on instability and finance. Routledge.
Myers, M.D., 2019. Qualitative research in business and management. Sage Publications
Limited.
Park, N.Y., 2019. A Survey of Behavioral Macro-Finance. World Scientific Book Chapters,
pp.167-185.
Pompian, M.M., 2017. Risk Tolerance and Behavioral Finance. Investment Management
Consultants Association Inc.
Shoup, C., 2017. Public finance. Routledge.
Soros, G., 2015. The alchemy of finance. John Wiley & Sons.
Statman, M., 2019. A Second Generation Behavioral Finance. Behavioral Finance: The
Coming Of Age, p.1.
Storey, D.J., 2016. Understanding the small business sector. Routledge.

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Appendices

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