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Corporate Finance Assignment - Analysis of Dividend Policy and Share Price Movement

Calculate portfolio weights and standard deviation for different investment options and analyze if assets A and B are priced according to CAPM.

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Added on  2023-06-13

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This assignment analyzes the dividend policy and share price movement of BHP Billiton and ANZ Bank. It includes creating weights for different portfolios, determining if assets A and B are priced in accordance with CAPM model, and comparing dividend pay-out ratios of both companies. The dividend policy of BHP Billiton is to provide dividends to the investors as and when the overall net income of the company grows. However, during difficult times the company has provided higher dividend pay-out ratio to reduce the negative impact on its share price. The company recently in 2016 paid dividends, while making a loss from operations, which mainly rolled the dividend pay-out ratio negative. The overall share price movement of BHP Billiton mainly indicates a positive movement after the declaration of dividend and annual report. However, due to the change in dividend policy the overall negative impact on share price of the company substantially reduced. The increment in dividend policy ratio of ANZ Bank for 2016 drastically reduced the overall share price, while after the announcement the spike in shares could be seen. This is due to the adoption of changed dividend policy, where the company provided higher dividends even after obtaining low net profit after tax. The positive increment in share value of ANZ is also seen after the disclosure of dividend policy, which allowed the company to increase their share price even with low financial results.

Corporate Finance Assignment - Analysis of Dividend Policy and Share Price Movement

Calculate portfolio weights and standard deviation for different investment options and analyze if assets A and B are priced according to CAPM.

   Added on 2023-06-13

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Running head: CORPORATE FINANCE ASSIGNMENT
Corporate Finance Assignment
Name of the Student:
Name of the University:
Authors Note:
Corporate Finance Assignment - Analysis of Dividend Policy and Share Price Movement_1
CORPORATE FINANCE ASSIGNMENT
1
Table of Contents
1 Creating weights for different portfolio and determining if assets A and B are priced in
accordance with CAPM model:.................................................................................................2
2.A Listing out details for each company:.................................................................................4
2.B Describing dividend policy of both the companies:............................................................5
2.C Comparing dividend pay-out ratio of both the companies:.................................................5
2.D Agreeing with the decision of the company to change its dividend policy:.......................6
2.E Examining the dividend policy of each company and analysing its share price movement:
....................................................................................................................................................7
Reference and Bibliography:......................................................................................................9
Corporate Finance Assignment - Analysis of Dividend Policy and Share Price Movement_2
CORPORATE FINANCE ASSIGNMENT
2
1 Creating weights for different portfolio and determining if assets A and B are priced
in accordance with CAPM model:
Particulars Value
Expected return 12.00%
Weight A 69.86%
Weight B 30.14%
Variance 213.33
Stdev 14.61
Particulars Value
Expected return 12.00%
Weight A 57.69%
Weight M 42.31%
Variance 147.50
Stdev 12.14
Particulars Value
Expected return 12.00%
Weight B 55.65%
Weight F 44.35%
Variance 83.31
Stdev 9.13
Corporate Finance Assignment - Analysis of Dividend Policy and Share Price Movement_3

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