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Microsoft Word - FIN201 Assignment for Non-Award Students.docx FIN201 – Assignment for Non-Award Students. Each question is worth 20 marks. In total this assignment will make up 40% of the total marks...

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Microsoft Word - FIN201 Assignment for Non-Award Students.docx
FIN201 – Assignment for Non-Award Students.
Each question is worth 20 marks. In total this assignment will make up 40% of the total marks
for the subject. You must submit your answers via moodle for this subject no later than 19th
April 2018.
1. The table provides data on 2 risky assets, A and B, the market portfolio M and the risk-free asset F.
Covariance
Asset Expected
Return (%)
A B M F
A

9.8

318

80

56

0
B

17.1

80

269

96

0
M

15.0

56

96

80

0
F

5.6

0

0

0

0
An investor wishes to achieve an expected return of 12% and is considering four ways this may
e done:
a) Invest in A and B
) Invest in A and M
c) Invest in B and F
d) Invest in M and F
For each of these options, calculate the portfolio weights required to achieve the expected
eturn of 12% and the portfolio standard deviation. Determine if assets A and B are priced
according to the capital asset pricing model (CAPM) and, in the light of the result, comment on
your findings. You must show all your workings and calculations you used to a
ive at your
conclusion.
2. Analysing dividend policy
Investors may attempt to infer a company’s dividend policy by observing its profits, dividends and
payout ratio over time. Select 2 companies that are part of the ASX50 index. Both companies must
not be from the same industry. If you select one from the financial industry, then the second
company cannot be from the financial sector.

A) For each company, list out the past 12 years (FY2006 to 2017)
- Net profit after tax
- Earnings per share
- Dividend per share
- Dividend payout ratio

B) Based on the dividend payout ratio data for the period 2006 to 2017, how would you describe
each of the company’s dividend policy?
C) Compare the dividend payout ratio of both companies over this period. What might you infer
from the differences in their dividend payout policy and the industry that they are in? Give
easons.

D) Note any major changes in each company’s dividend policy over this period and the reasons
given by the companies for such changes. Do you agree with the company’s decision to
change their dividend policy? Give reasons.

E) Examine the daily share price movement of each company in the 4-week period before and
after its most recent change in dividend policy. Plot a chart of the price movements for each
company during this period. What conclusions can you draw from the movements of their share
price?
Answered Same Day Apr 11, 2020 FIN201

Solution

Pulkit answered on Apr 17 2020
131 Votes
Solution 2
Part-B
Dividend Policy of the companies:
Amcor Limited: The Amcor Limited is in the sector of material packaging which require huge amount of capital investment for the plant and machinery which are used for the packaging of material and also require funds for the repair and maintenance of plants.
The company’s average dividend payout ratio in past 12 years indicates that the company increases its shareholder’s wealth by paying them more than 65% of its earning per share each year. The dividend per share is equal to 34 cents in year 2006 to year 2009 and then it decrease to 29.5 cents then start increasing to 43 cents in recent financial year 2017. It indicate that the Board of Directors of the Amcor Limited aim to have operating cash flow after capital expenditure equal to or greater than the total funds paid out as dividends.
Ramsay Health Care: The Company is engage in the health service facilitation and becomes a global hospital group which operates more than 235 hospitals and facilitates the services like surgery centers, treatment facilities, rehabilitation and psychiatric units. Ramsay Health Care’ share is one the leading healthcare stocks in the Australia’s stock exchange.
The company’s average dividend payout ratio in past 8 years...
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