AFIN250 Effects of the COVID-19 Pandemic on Assets Assignment Sample

Subject Code : AFIN250
University : Macquarie University My Assignment Services is not sponsored or endorsed by this college or university.
Subject Name : Accounting and Finance

Investments

4. Expected Return on Stock = Risk- Free Return + (Beta *Market Risk Premium)

CAMP Formula

ERi =Rf + Bi(ERm –Rf)

Where:

ERi = Expected Return on Stock

Rf = Risk- Free Return

Bi = Beta

(ERm –Rf)= Market Risk Premium

Market Risk Premium = Expected Market Return – Risk Free Rate of return

Substituting the value from excel provided

Dominos:

ER_i = 1 + 0.377224(8-1) = 3.640568

Qantas

ER_i = 1+ 1.08607(8-1) = 8.60249

Quantas has high expected return, while Dominos had low.

5. In the Excel

Report

1.As per the announcement on March 16^th’20 Dominos had announced to take their work with sure well care manner where they will remain open and serving the nationwide with an ageda of 100% zero human contact to deliveries. The market of dominos remained on the floating ground with various ups and down, though the company decided to close their chains in France for the period of 15 days, still the company mained to open its chains in another part of the world, the statement made by dominos still kept the stockholders engaged with making a very precised comment “It is not certain if the temperorary closure of the Company’s store in France will have a material effect of the Finanicial Result of FY20”.

The announcement made on 25^th March’20 had a very unpredictable stat where if one part of world made the Company stand still (New Zealand), while many parts of world experience a heavy demand and also recruit of drivers. So, overall the Company’s balance sheet remains strong and the company has Significant headroom in its committed facilities and covenants

The overall graphical representation has marked the Company to hold to its place, may be even down sometimes still it has made its up in the graph. Therefore, the suffering in the Company is going to be short term.

Due to the hit of Covid-19, the tourism business immensely effected the losses and suffering could be easily understood by the several announcements made by the Company.

Total Group international capital will be cut by 90 per cent until at least the end of the May 2020 .
Total Group Domestic capital will be cut by around 60 per cent until at least the end of May 2020.

Beta is a relation between variance and covariance, where it is marked to determine the relation between stock of overall market and relative stock.
Beta is a component of the Capital Asset Pricing Model, which calculates the cost of equity funding and can help determine the rate of return to expect relative to perceived risk.
The implication of beta seems to have better indication for short term analysis.
A beta greater than 1.0 suggests that the stock is more volatile than the broader market, and a beta less than 1.0 indicates a stock with lower volatility.

3. The various announcement made by Qantas left market with various questionable points, stakeholder to employees, everyone went blank with various cutoffs. The stock market came crashing down with pricing up to 3,540. This lead to sudden fall in the volume of investors.

The Graph and market announcements have make it clear that the Covid-19 has severely damaged the market of tour and tourism, and will continue to the time unpredictable and this had led to fall of stock in the market over a recent time phrase.

References for Investments

For more guidance: https://www.asx.com.au/asx/statistics/announcements.do (Accessed 1 December 2019)

Australian Energy Regulator, 2009, Electricity transmission and distribution network service providers: Review of the weighted average cost of capital (WACC) parameters, May 2009.

Vasicek, O., 1973, “A note on using cross-sectional information in Bayesian estimation of security betas,” Journal of Finance, 28, 1233–1245.

Frontier Economics, 2015, Review of the AER's conceptual analysis for equity beta, May

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