Part 1. Research and fact finding of Australian financial market

1.1 Comparison of four key financial institutions: commercial banks, insurance companies, investment banks and investment funds in Australia from the perspective of a potential investor who would like to invest into the institutions

Criteria for comparison include: (1) classification (the group of financial institutions it belongs to); (2) market sector of operation; (3) key business activities; and (4) main source of income. Organize your group’s comparison in a relevant table. Your group’s research should be supported by a fact finding of real life examples of a commercial bank, insurance company, and investment bank and investment fund in Australia. Your group’s discussion on each example should reflect the above mentioned criteria and the following information: (i) what is the code of stock listed, (ii) when was the company’s stock was first listed, (iii) what is the current market capitalization of that stock, (iv) the current total share outstanding, (v) who is the chairman and who is the CEO of that company, (vi) a graph of five year dividend payment for each company and (vii) next dividend date. Using ASX and ASIC websites for the fact finding. Your group is not allowed to choose the cases I have used as examples in this assignment instruction.

 Example: Commonwealth Bank is a commercial bank, which is categorized in the group of Authorized Deposit-taking Institutions (ADIs) in Australia. Commonwealth Bank 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 CBA. The stock was first listed on 12/09/1991. The total outstanding share 1,770,239,507. As of 18 February 2020, CBA market cap is 158.37bn, Ms Catherine Livingstone is the CBA’s Chairman, Non Exec. Director and Mr Matthew Comyn is the Managing Director, CEO, Director. The next dividend payment date is 31 March 2020.

1.2 Analysis of three financial management questions: (i) capital budgeting, (ii) capital structure and (ii) working capital management

Define the three financial management questions and justify your group’s analysis by illustrating examples: Choose one or more events described by media (CNN Business, Financial Times, Dow Jones financial news etc.) about a company who is doing one or more activities related to the three financial management questions. Analyse that event (s) applying the three financial management questions. Note: Each question is to be illustrated by at least one event.

Example of an event in media that reflect one of the three financial management questions:

Commonwealth Bank’s Project Bond-i: Bonds on block chain in collaboration with World Bank: “In August 2018 the World Bank and CommBank successfully launched Bond-i ('blockchain operated new debt instrument'). It's the world's first bond to be created, allocated, transferred and managed through its life cycle using block chain technology”. Source: https://www.commbank.com.au/business/business-insights/project-bondi.html

Bond-I Project by Commonwealth Bank is an outstanding example of capital budgeting in financial management. This is an investment decision to generate future cash flows for the bank in providing the auxiliary financial service of issuing debt instruments. Using block-chain technology to create, locate, transfer and manage debt instruments undoubtedly enable huge saving of money and enhancing efficiency. However, the security risk may be a big potential problem for this project.