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Introduction

In order to analyse profitability of the Australian Stock Exchange listed companies there is need to measure their market value as well as efficiency in meeting the debts. In the present study there will be measurements over the 7 organisations which has the appropriate market value and have the sufficiency equity in the market. The assignment report will be based on analysing the 7 companies such as AGL Energy Limited, ANZ Banking group Limited, BHP Billiton Limited, Macquarie group limited, National Aust. Bank, Telstra Corporation and Westfield Corp Staped Securities.

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Analysing the treasury notes rate of Australia

In order to analyse the risk free rate of Treasury Notes in Australia which were on the basis of the shortest maturity (Brock, 2018). Therefore, the analysis can be seen in the below listed Appendix A. The collected information were from 1 January 2000 to 31st December 2017.

Measuring the monthly returns of each shares with the help of share price indices and market price index

By considering the share value of 7 ASX listed corporations there has been analysis based on determining the risk free rate and market rate (Joy, 2018). However, all the organisation has been analysed and they present the risk free rate as in Appendix B.

Analysing the expected return of each shares

The average of rate return for all the corporation which will be seen in Appendix B. therefore, it beings the analysis as National Aust. Bank 0.90%, Telstra Corporation 0.81% Westfield Corp Stapled Securities 0.78%,Macquarie group limited 0.84%, ANZ Banking group limited 1.18%, BHP Billiton Limited 1.18% and AGL energy Limited 1.53%. Therefore, in relation with analysing such operations it can be said that ANZ, AGL & BHP are to most profitable industries in terms of giving the favourable returns to their clients (Lafortune, Rothstein & Schanzenbach, 2018).

Measuring the Beta value of each shares

To analyse the beta value of the proposed data set there has been use of SLOPE formula in excel sheet and which represents the Beta value of such data base (Guthman, 2018).

Companies

Beta value (slope)

Beta Value

National Aust. Bank(ra)

-0.00092

-0.587

Telstra Corporation

0.00030

0.241

Westfield Corp Stapled Securities

0.00149

1.298

Macquarie group limited

-0.00429

-3.230

ANZ Banking group limited

-0.00057

-0.359

BHP Billiton Limited

0.00396

1.837

AGL energy Limited

-0.00132

-0.379

In consideration with analysing the Beta value of the industries it can be said that those firms who have beta rate more the 1 than there share value id volatile and can have variation in the future (Cerchiello & Nicola, 2018). On the other side, those industries which has lower beta rate than 1 than the prices of their shares will remain constant for the long period.

Determining the fair return with the help of capital asset pricing model

To determining the CAPM value there is need to consider all the information which will be useful for analysis (Rocheteau, Wright & Zhang, 2018). Moreover, the CAMP value of these respected industries are:

 

National Aust. Bank

Telstra Corporation

Westfield Corp Stapled Securities

Macquarie group limited

ANZ Banking group limited

BHP Billiton Limited

AGL energy Limited

risk free rate

1.303

1.303

1.303

1.303

1.303

1.303

1.303

market risk

0.90%

0.81%

0.78%

0.84%

1.18%

1.18%

1.53%

beta value

-0.587

0.241

1.298

-3.230

-0.359

1.837

-0.379

CAPM

2.063

0.990

-0.379

5.485

1.767

-1.068

1.791

Preparing the portfolio and calculating the rate of return, beta value

In relation with the rate of return of all the organisation there has been selection of 3 companies such as ANZ banking group limited, AGL energy Limited and BHP Billiton limited. Moreover, the reason behind selecting the three organisation such as ANZ, AGL and BHP is that they are offering comparatively higher returns to their shareholders as well as have the appropriate weight percentage in the market (Block & et.al., 2018). Therefore, in relation with determining the ability of the company to make the profitable returns to their clients these organisations will be satisfactory in terms of making the appropriate returns on investments (Vlcek, 2018). Moreover, the shareholders will be profitable and helpful to have appropriate return on their invested capital in these corporations (Jakobi, 2018). Similarly, among such observations and analysis it will be said that BHP billiton will be a successful choice of investors in terms of investment purpose. The firm is having appropriate market value which reflects the financial position and stability of the firm in meeting the requirements (Kar, 2018).

Conclusion

On the basis of above report it can be said that the Australian Stock Exchange is the best market of dealing the securities and treasury notes in the internal market. Moreover, it helps the investors in terms of analysing the profitability as well as liquidity of the organisations. Therefore, in relation with this report the analysis has been made over 7 ASX listed organisation which in turn has been analysed and have the useful information for equity holders.

References

  • Block, J. H. & et.al., (2018). New players in entrepreneurial finance and why they are there. Small Business Economics. 50(2). 239-250.
  • Brock, W. A. (2018). Nonlinearity and complex dynamics in economics and finance. In The economy as an evolving complex system (pp. 77-97). CRC Press.
  • Cerchiello, P., & Nicola, G. (2018). Assessing News Contagion in Finance. Econometrics. 6(1). 5.
  • Guthman, J. (2018). Enterprising Nature: Economics, Markets, and Finance in Global Biodiversity Politics.
  • Jakobi, A. P. (2018). Governing illicit finance in transnational security spaces: the FATF and anti-money laundering. Crime, Law and Social Change. 69(2). 173-190.
  • Joy, J. (2018). Defining the Deal Timeline: Balancing Legal, HR, IT, and Finance. In Divestitures and Spin-Offs (pp. 39-46). Springer, Boston, MA.

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