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ECF6102 QUANTITATIVE SKILLS FOR BUSINESS

Are you looking for assignment help services for the ECF6102 QUANTITATIVE SKILLS FOR BUSINESS? Edith Cowan University is one of the top institute for students pursuing different educational disciplines. ECF6102 Quantitative skills for business subject provide students with the basic understanding on how quantitative skills are important for business decision making process. Major group assignment for this subject contains two parts in which the assignment needs to be completed.

ECF6102 QUANTITATIVE SKILLS FOR BUSINESS
ECF6102 QUANTITATIVE SKILLS FOR BUSINESS

ECF6102 Major Group Assignment Requirements

This assignment is to be completed in two (2) parts:

Part A Uses the data set called ‘TOP 50ASX’ from the Blackboard site in the Assignment folder.

You are required to answer a number of questions concerning the data set.

This part involves you to perform the calculation for questions using the data set ‘TOP 50ASX’. You should use your calculator, appropriate formulae, and statistical methodology to answer the questions. All the steps and working must be shown for this section, providing a clear and logical layout of your answer. (Use as much accuracy as is necessary and generally up to 4 decimal places).

Some of the solutions also required to use Excel software (PhStat or Data Analysis). Provide a separate printout of your results where applicable.

Part B   This part requires you to undertake regression analysis using the data set ‘STOCKS PRICES 2019’.

INTRODUCTION TO THE DATA SETS:

TOP 50ASX

The file Top 50ASX contains a list of top 50 listed companies, extracted from Eikon on 12.08.2019. The following variables are included:

  • Name: the full company name
  • RIC: the Australian Stock Exchange allocated company’s three-letter code;
  • PE: the price-to-earnings ratio (PE ratio) is the ratio for valuing a company that measures its current share price relative to its per share earnings (EPS)
  • EPS: the earning per share
  • DPS: the dividends per share (DPS) refers to the total dividend a company pays out over a 12-month period, divided by the total number of outstanding shares.
  • Div Yld [%]: Dividend Yield – this is the dividend in cents divided by the share price
  • ROE [%]: Return On Equity (RoE) is a financial ratio that calculates the amount of net profit earned as a percentage of shareholders’ equity.
  • P/Book: the price-to-book ratio compares a company’s market value to its book value. The market value of a company is its share price multiplied by the number of outstanding shares. The book value is the net assets of a company.
  • P/Sales: the price-to-sales ratio is a valuation ratio that compares a company’s stock price to its revenues. It is an indicator of the value placed on each dollar of a company’s sales or revenues.
  • Market Capitalisation: market capitalisation refers to the total dollar market value of a company’s outstanding shares. It is calculated by multiplying a company’s shares outstanding by the current market price of one share.

STOCK PRICES 2019

The file Stock Prices 2019 contains weekly data for the ASX ALL ORDINARIES and three (3) other companies, extracted from Eikon on 12.08.2019. The following variables are included:

  • DATE – week beginning on the date given;
  • ALL ORD – weekly closing value for the ASX ALL ORDINARIES index;
  • QAN – weekly closing stock price for QANTAS AIRWAYS LIMITED;
  • MGR – weekly closing stock price for MIRVAC GROUP;
  • SCG – weekly closing stock price for SCENTRE GROUP.

Part A: Statistical Analysis

QUESTION 1

Using the sample data attached, calculate descriptive statistics measures of central tendency and dispersion (including mean and standard deviation) for the variables:

  1. P/E ratio                                                                                           (1.5 marks)
    1. DPS                                                                                                  (1.5 marks)
    1. Did Yld                                                                                             (1.5 marks)
    1. P/Sales                                                                                            (1.5 marks)

Note: Use Excel/PhStat for this question.

QUESTION 2

Use Excel/PhStat to determine normality for ALL the above variables in Question 1. It must be achieved by the normality plot graphs or box-plot diagram.

(6 marks)

QUESTION 3

Write a summary of descriptive statistical findings in Questions 1 and 2. Determine whether the data appear to be approximately normally distributed by writing a summary on the findings in Questions 1 and 2. Refer to the relevant graphs/diagrams/tables in Questions 1 and 2. (10 marks)

QUESTION 4

Using the sample data, calculate the sample proportion of companies for which Dividend Yield exceeds 10%, and its corresponding standard deviation. (5 marks)

QUESTION 5

Set up and interpret the following confidence intervals:

  1. a 95% confidence interval for the true population mean ROE.          (4 marks)
  2. a 99% confidence interval for the true population mean DPS.           (4 marks)
  3. a 90% confidence interval for the true population proportion of all companies whose Dividend Yield is better than 10%.               (4 marks)

Note: The relevant Excel/PhStat printout should also be provided for all the above answers.

QUESTION 6

A follow-up study will provide a point estimate of the population proportion of companies with Dividend Yield that exceeds 10%. The study must provide 95% confidence that the point estimate is within 0.17 of the population proportion. If no previous proportion estimate is available (do not refer to the calculation in Question 4 above), how large a sample would you recommend for this study? Explain your answer.

(5 marks)

QUESTION 7

A stock market analysts claimed that on average, the P/E ratio of all companies in the ASX 50 is more than 20. Do the data provide significant support for this claim?

Use a 5% significance level to test this claim. You should use both the critical value approach and the p-value approach to justify your answer. The relevant Excel/PhStat printout should also be provided.

Comment on your findings. (8 marks)

QUESTION 8

The Australian Financial Review has claimed that less than 25% of all companies in the ASX 50 have a dividend yield (%) that is 10% or more. How much evidence does the data providers need to support this claim?

Use a 5% level of significance to test this claim. You should use both the critical value approach and the p-value approach to justify your answer. The relevant Excel/PhStat printout should also be provided.

Comment on your findings.

(8 marks)

Part B: Regression Analysis

QUESTION 9

The volatility of a stock is often measured by its beta value. You can estimate the beta value of a stock by developing a simple linear regression model, using the weekly percentage change in the stock as the dependent variable and the weekly percentage change in a market index as the independent variable. The ASX ALL ORDINARIES index is a common index to use. For example, if you wanted to estimate the beta value for ABC Company, you could use the following model, which is sometimes referred to as a market model:

(% 𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤 𝑐𝑐ℎ𝑎𝑎𝑎𝑎𝑎𝑎𝑤𝑤 𝑖𝑖𝑎𝑎 𝐴𝐴𝐴𝐴𝐴𝐴 𝐴𝐴𝐶𝐶𝐶𝐶𝐶𝐶𝑎𝑎𝑎𝑎𝑤𝑤)

=  𝛽𝛽0 + 𝛽𝛽1(% 𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤 𝑐𝑐ℎ𝑎𝑎𝑎𝑎𝑎𝑎𝑤𝑤 𝑖𝑖𝑎𝑎 𝐴𝐴𝐴𝐴𝐴𝐴 𝐴𝐴𝐴𝐴𝐴𝐴 𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝐴𝐴𝑂𝑂𝑂𝑂𝑂𝑂𝐴𝐴 𝑖𝑖𝑎𝑎𝑖𝑖𝑤𝑤𝑖𝑖) + 𝜀𝜀

The least-squared regression estimate of the slope β1 is the estimate of the beta value for ABC Company. A stock with a beta value of 1.0 tends to move the same as the overall market. A stock with a beta value of 1.5 tends to move 50% more than the overall market, and a stock with a beta value of 0.6 tends to move only 60% as much as the overall market. Stocks with negative beta values tend to move in the opposite direction of the overall market.

The ASX ALL ORDINARIES index tracks the overall movement of the stock market by considering the stock prices of all listed corporations on ASX.

Using the given data set ‘Stocks Prices 2019’ and simple ordinary least squares regression- based solutions, estimate the market models for QAN, MGR and SCG:

A computer printout is a sufficient solution here.

HINT: Calculate Use the percentage change in the ASX ALL ORDINARIES index as the independent variable and the percentage change in a company’s stock price as the dependent variable) (9 marks)

QUESTION 10

Write a summary of your findings.

Which company has the best estimated market model? Explain your reasons here. (10 marks)

QUESTION 11

For each of the three companies, interpret the beta value.

How can investors use the beta value as a guide for investing? (7 marks)

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