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INTRODUCTION
This assignment is focused on researches on financial market and capital budgeting
analysis. It contains three parts which has helped us learn how to conduct research
and find facts related to Australian financial market mainly Australia Stock Exchange,
Australian Securities and Investment Commission and the Australian Prudential
Regulation Authority (APRA). It enables us undertake risk analysis and project
evaluation to ensure best return on investment of a business.
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PART-1
1.1)
A) Commercial Bank
Westpac Banking Corporation (Westpac) is a commercial bank, which is categorized
in the group of Authorized Deposit-taking Institutions (ADIs) in Australia. Westpac
Banking Corporation (Westpac) operates in banking market sector. Its key business
is taking deposit from individuals as well as businesses, and then lend those pooled
savings to other individuals and businesses. Its main source of income is the
difference between the interest rates it charges the borrowers and the interest rates
it pays the depositors. The code of listed commonwealth bank stock on Australian
Stock Exchange is WBC. The stock was first listed on 18/07/1970. The total
outstanding share 3,611,684,870. As of 28 June 2020, WBC market cap is 64.97bn,
Mr John McFarlane is the WBC’s Chairman, and Mr Peter Francis King is the
Managing Director, CEO. The next dividend payment date is 30 June 2020. (As per
the announcement made by Westpac, Dividend due on 30Th June has been
cancelled).
B) Insurance Company
QBE INSURANCE GROUP LIMITED is an insurance company , which is
categorized in the group of insurer and reinsurer in Australia. QBE INSURANCE
GROUP LIMITED operates in insurance market sector. Its key business is
insurance. Its main source of income is the premium it receives from corporate and
non-corporate clients in terms of insurance premium as well as reinsurance premium
from various insurers across globe. The code of listed QBE INSURANCE GROUP
LIMITED stock on Australian Stock Exchange is QBE. The stock was first listed on
28/06/1973. The total outstanding share 1,469,216,191. As of 28 June 2020, WBC
market cap is 12.56bn, Mr Mike Wilkins is the QBE’s Chairman, and Mr Pat Regan
is the CEO. The next dividend declaration date is 13th August 2020. (Interim dividend
paid on 09-04-2020 of 27 cents per share)
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2016 2017 2018 2019 2020
DIVIDEND PAYMENT HISTORY OF WBC
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C) Investment Bank
MACQUARIE GROUP LTD is an investment bank, which is categorized in the group
of Diversified Financial in Australia. MACQUARIE GROUP LTD operates in Financial
services sector. Its key business includes investment banking, cash management
services and credit card operations. Its main source of income are the charges it
takes from providing diversified services. The code of listed MACQUARIE GROUP
LTD stock on Australian Stock Exchange is MQG. The stock was first listed on
05/11/2007. The total outstanding share 359,406,004. As of 28 June 2020, AEF
market cap is 42.12bn, Mr Peter H Warne is the MQG’s Chairman, Non-Exec
Director and Ms Shemara Wikramanayake is the Managing Director, CEO. The
next dividend payment date is unannounced. (Recent dividend paid on 18–05-2020)
4.3 4.85 5.35
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2016 2017 2018 2019 2020
DIVIDEND PAYMENT HISTORY OF
QBE
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2016 2017 2018 2019 2020
DIVIDEND PAYMENT HISTORY OF MQG
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D) Investment Fund
AUSTRALIAN ETHICAL INVESTMENT LIMITED is an investment fund, which is
categorized in the group of Diversified Financial in Australia. AUSTRALIAN
ETHICAL INVESTMENT LIMITED operates in wealth management sector. Its key
business is management of wealth of different individual and businesses. Its main
source of income is the fee it receives on fund management. The code of listed
AUSTRALIAN ETHICAL INVESTMENT LIMITED stock on Australian Stock
Exchange is AEF. The stock was first listed on 17/12/2002. The total outstanding
share 112,387,138. As of 28 June 2020, AEF market cap is 788.96 million, Mr
Stephen Phillip Gibbs is the AEF’s Chairman, and Mr John McMurdo is the
Managing Director, CEO. The next dividend payment date is unannounced. (Recent
dividend paid on 04–03–2020)
4.3
4.85
5.35
6.1
1.8
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2016 2017 2018 2019 2020
DIVIDEND PAYMENT HISTORY OF AEF
1.2
i) Capital Budgeting
It is defined as a process of analysing and evaluating majors investment projects of a
business so as to ensure best returns on investments.
RIO Tinto has announced it will seek to raise $US1.2 billion in a bond issue.
https://www.news.com.au/finance/business/rio-to-raise-us12b–in-bonds/news-
story/00a329f03d5e012fab68fdee28536760
The world’s second largest mining concern, RIO TINTO, in the upcoming weeks will
raise 1.2 billion USD through bonds issue carrying a coupon rate of 3.75 % pa.
This is a classic example of capital budgeting, an important decision by management
to bring down the cost of its capital making its future operations viable and profitable.
The low coupon payment carrying bonds will open new doors for expansion but fixed
payment liability may pose a liquidity threat to the giant if the project fails.
ii) Capital structure
Capital Structure is defined as proportion of various sources of funds in a business,
which consists of long-term debts and equity.
National Australia Bank launches $3.5bn capital raising as earnings hit by
coronavirus
https://www.theguardian.com/australia-news/2020/apr/27/national-australia-bank–
nab-launches-35bn-capital-raising-as-earnings-hit-by-coronavirus
One of the biggest banks in Australia, NAB seeks to raise 3.5 billion dollars after its
