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The Intended Learning Outcomes of the Assignment are:
Understand the role of the Eurocurrency market Understand bond valuation and duration
Understand stock market bubbles, volatility and market efficiency
To demonstrate understanding and use of valuation models in the pricing of equity.
Assignment
1. (a) The Eurocurrency market offers considerable benefits and opportunities for borrowers and lenders. Describe in detail what institutional investors seeking to use the market can expect, including its drawbacks. [15 marks]
(b) What are the necessary conditions for an efficient market? Comment on the extent to which these conditions exist in the stock markets of G7 economies and, if so, whether stocks traded on these markets, follow a random walk, citing empirical evidence to support your answer. [25 marks]
(c) In an order-driven stock market trading system, stock prices are determined by supply and demand, whereas in a quote-driven system, market makers quote prices at which they are willing to sell. Compare and contrasts these trading systems and explain how the bid-offer spread is determined. [10 marks]
(d) Outline the factors giving rise to speculative bubbles and explain how rational bubbles evolve and grow with time. [20 marks]
Assignment Guide
The answer to the questions should draw on the assigned chapters, along with the related reading, which requires an explanation of the role of the Eurocurrency markets, how the market facilitates the needs of borrowers and lenders and the hidden risk participants face in addition to the advantages borrowers may realise from using the Eurocurrency market. Other parts of the assignment require you to address the efficient market hypothesis, and the factors giving rise to stock market bubbles. It is strongly advised that you approach the questions independently, and marks will be awarded on well you make use of the supporting literature
Useful References
Bodie, Z., Kane, A. and Marcus, A. (2021), Investments (12th ed) McGraw-Hill.
Bekaert, G. and Hodrick, R. (2018), International Financial Management. Cambridge University Press. Moosa, I. (2010) International Finance, McGraw-Hill
Word Count
The coursework word count is a
MAXIMUM OF 1000 WORDS (THERE IS NO 10% MARGIN) excluding reference list, bibliography, appendices, the cover page, abstract, glossary and list of tables, figures, charts and abbreviation. Tables are expected to be primarily for the presentation of numerical data. Work that exceeds 1,000 words will not be read beyond the stated word count.
Referencing Requirements
All sources should be acknowledged and appropriately cited within your work, following the University’s approved referencing conventions [APA 6th ed.]. For further guidance see:
Referencing is required to give intellectual credit to your source, help your reader recover your source easily and to avoid being accused of plagiarism.
Students are reminded that the University will not tolerate academic dishonesty in any form. This is cheating. For further guidance see
Student Handbook pages 8 and 9:
Please include a Reference List of all items cited in your work and follow this with a Bibliography to show your wider background reading.
Plagiarism
Students are reminded of the need to avoid plagiarism in all assessments. The definition of plagiarism includes claiming somebody elses work as your own, for example through inadequate referencing of sources of material used (including Internet sources). Direct quotations must be enclosed in quotation marks and referenced. Using other peoples ideas requires a reference even if it is not a direct quote. The University Regulations describe plagiarism as:
the incorporation by a student in work for assessment of material which is not their own, in the sense that all or a substantial part of the work has been copied without any adequate attempt at attribution, or has been incorporated as if it were the students own when in fact it is wholly or substantially the work of another person or persons.
Any student suspected of plagiarising will be referred to the PBS Student Assessment and Assessment Regulations Lead and an Academic Misconduct Hearing will be arranged.
If any student has a query about any of the above matters and wishes to obtain clarification or further information please contact the unit co-ordinator or your personal tutor.
Marking and Feedback
Individual feedback will be provided on feedback sheets. These sheets will highlight the strengths of the work and identify development points to help you to work out where you went wrong and how you can improve your performance in the future.
Table 1: Marking Criteria – Essay Type
Component and Suggested Marks
Failure < 40% Pass 40 55% Good Pass 56 69% Distinction >70%
Introduction and background to topic
Limited introduction not focussed on aims of assignment
Topic well focussed but introduction and context
incomplete
Introduction clearly expressed; context well
defined
As for good pass
Understanding of key issues
Minimal understanding of key issues
Main issues largely identified, but some lack of focus
All issues clearly understood, with
some differentiation in terms of
importance
Issues clearly understood and differentiated in terms of importance
Evidence of reading and/or choice of appropriate concepts
Little evidence of reading or limited
/inappropriate use of module material; unclear theoretical framework; important work uncited or key
concepts ignored
Evidence of reading or appropriate use of module material but with some gaps. Literature
/concepts adequately but
not critically reviewed.
Good critical literature review or well-justified choice of module material. Theoretical framework supports study.
Demonstrates high level of scholarship.
Analysis
Largely descriptive; practically no analysis of central issues.
Qualitative or quantitative data analysis inaccurate.
Some critical analysis of central issues, but with some inaccuracies.
Relevant and full analysis
Comprehensive and critical analysis of central issues.
Presentation and evaluation of evidence
Some evidence to support arguments but uncritical acceptance of material; poor or incomplete citation; unjustified conclusions.
Appropriate evidence, generally assessed critically; weak interpretation of qualitative aspects; some gaps in linkages between evidence
and conclusions.
Full, critical assessment of discriminatingly selected material; some evidence of independent thought
Full, critical assessment of discriminatingly selected material; evidence of independent thought; substantial individual
insights evident
Presentation: Structure, clarity, use of grammar, correct spelling
Poor: lack of structure and clarity; grammatical mistakes; inadequate referencing
Reasonably clear presentation; reasonable referencing; few grammatical/spelli ng mistakes
Demonstrates very good communication skills; accurate referencing; very few/no grammatical or spelling errors
Excellent communication skills; accurate referencing; virtually no errors; scholarly, well-organised
treatment of material
Attainment of learning objectives
Attainment of few/none of the relevant learning objectives
Attainment of a good majority of the relevant
learning objectives
Attainment of substantial majority of the
relevant learning objectives
Attainment of nearly all of the relevant learning objectives
Level 6
80+
As below plus:
Outstanding work contains accurate, relevant material, demonstrates understanding of complex subject matter and is able to view it in a wider context. Shows originality and confidence in analysing and criticising assumptions, is aware of the limits of knowledge. Likely to add new insights to the topic and approaches the quality of published material.
Evidence of extensive research, uses and presents references effectively.
Outstanding quality in terms of organisation, structure, use and flow of language, grammar, spelling, format, presentation, diagrams, tables etc.
70-79
As below plus:
Outstanding work contains accurate, relevant material, demonstrates understanding of complex subject matter and is able to view it in a wider context. Shows originality and confidence in analysing and criticising assumptions, is aware of the limits of knowledge.
Evidence of extensive research, uses and presents references effectively.
Excellent in terms of organisation, structure, use and flow of language, grammar, spelling, format, presentation, diagrams, tables etc.
Level 6
60-69
As below plus:
Very good work contains most of the information required, is accurate and relevant and demonstrates understanding of the subject matter and attempts to view it in a wider context. Shows some originality of thought with good critique and analysis assumptions, is aware of the limits of knowledge.
Well-researched, good use and presentation of references.
Very good in terms of organisation, structure, use and flow of language.
50-59
As below plus:
Work that attempts to address the topic with some understanding and analysis, key aspects of the subject matter covered.
Research extends to primary sources. Appropriately cited and presented references.
Satisfactory presentation with respect to presentation, organisation, language, grammar, spelling, format, diagrams, tables etc.
40-49
Adequate work which attempts to address the topic with limited understanding and analysis.
Some research using texts, Internet and key reference sources with reference citation and presentation according to convention.
An attempt to follow directions regarding organisation, structure, use and flow of language, grammar, spelling, format, diagrams, tables etc.
30- 39
FAIL Anything which is inadequate in most or all of the following: length, content, structure, analysis, expression, argument, relevance, research and presentation. Work in this range attempts to address the question / problem but is substantially incomplete and deficient. Serious problems with a number of aspects
of language use are often found in work in this range.
0-29
FAIL No serious attempt to address the question or problem, and / or manifests
a serious misunderstanding of the requirements of the assignment. Acutely deficient in all aspects.
