Assessment Information This assignment is designed to assess learning outcomes: 1. Discuss the role and functioning of financial markets This assignment is an individual assignment. This assignment requires you to write an individual report based on a case study. The case study is provided in the next two pages. THIS VERSION HAS BEEN INTERNALLY MODERATED AND CURRENTLY RELEASED IT IS SUBJECT TO CHANGE BASED ON FURTHER EXTERNAL COMMENTS Assignment Brief Template Page 1 of 7 This document is for Coventry University students for their own use in completing their assessed work for this module and should not be passed to third parties or posted on any website. Any infringements of this rule should be reported to [email protected] BEGINNING OF CASE STUDY CASE STUDY FOR INDIVIDUAL REPORT 23 years old Coventry is trying to come up with a personal financial plan following his/her graduation. Coventry was offered a job by Midland Engine based in Warwickshire. Coventrys starting salary is 28,000 per year with frugal graduate living cost at 10,000. The cost of living will increase 5% a year until he/she get married then increasing at 10%. When Coventry has a family, his/her cost of living will increase by 20%. Luckily, Coventry has no student loan to pay off. Income Being a graduate, Coventry is expected to earn 38,000 when he/she gets to 33. At 40, he/she expects to earn 48,000 in a middle management position, thereafter, increasing at 2% per year. Get Married with Kid(s) Coventry plans to get married at 28. His/her partner has the same graduate income and increment with Coventry. They expect to produce/adopt one child when Coventry reaches 33. Then they have no plan to be more productive, other than financially. Inheritance When the child is born or adopted, Coventry is expected to inherit 325,000 from his aunt who bequested this amount to Coventry on her will with the condition that there is to be at least one child in Coventrys family. If there are more than two children, the inheritance automatically increases, but will be capped at 455,000 maximums. Your Job Coventry regrets that he/she didnt take 251FIN so he/she approaches you to help out with developing his/her financial plans. The following plan and decision are to be made based on your thorough research on financial market. You will conduct research on financial market and come up with plan which introduces products and options that are suitable for Coventry. (1) Evaluatedifferentoptionstobuy,loanorhireacartogettowork.Thevalueofcaris 14,000. Annual depreciation at 20%, straight line method. You got the choice to pick the car for Coventry. Coventry needs the car to get to work, otherwise, he/she must relocate. (2) Save/investenoughtogetmarriedin5years.Costofweddingis9,000(onCoventry). (3) BuyingahouseinHertfordshirewithapriceof400,000.Advisehim/herondown payment/deposit (50% on Coventry and 50% by the other half) and the type of mortgage (4) SendingCoventryskidtoprivateschoolwhenhe/shereaches4yearsold.Thecostof private school is 15,000 per year increasing at 10% per year until the child reaches 18. Investigate whether this is a viable option and what financial product he/she can take on to mitigate the increasing cost of tuition. (5) PayingforkidsUniversityeducationwhichisexpectedtobearound30,000peryear.The University education lasts for 3 years. (6) Coventryplanstoretireattheageof50.Advisehim/heronhowmuchhe/sheshouldsave for his/her retirement. When he/she retires he/she can take 25% of his pension in a lump sum tax free. (7) Lifeisuncertain.AdviseCoventrytotakeoutalifeinsurancepolicytoprotecthis/herwealth and loved one. (8) AdviseCoventrywhatproductsaresuitabletoinvestandinformCoventrytheappropriate level of return and risk to reach his/her financial goal. Coventry has no financial skills and Assignment Brief Template Page 2 of 7 This document is for Coventry University students for their own use in completing their assessed work for this module and should not be passed to third parties or posted on any website. Any infringements of this rule should be reported to [email protected] can only put his/her money into saving account. Think creatively how you could help him/her to invest based on products available on financial market. Serious Research Your analysis should be based on rigorous research on the UK financial market. You can compute data using Excel or calculators and formula needs to be revealed. The following website might be useful for doing the research on financial market and products available. ? FT & Investor Chronicle ? Morningstar UK Assumptions Your research should consider the following assumptions. based on whats currently available in the UK financial market. The following information might be useful to obtain through research. ? Interest rate for car loan, hire purchase and mortgage if needed from high street bank or main car dealers. ? Viable pension plan with 20% state contribution and 10% employer contribution. ? Depreciation at 20% using straight line method for car and a mileage of 15,000 a year with no scrap value when the car becomes fully depreciated. ? Income from Coventry and his/her partner are combined and can be invested together in any or a combination of different asset classes, including cash, bond, equity, real estate, pension fund, stamp, antique as long as appropriate level of risk and return are considered and appropriate to the lifestyle and circumstances of Coventry as stated above. ? Inheritance is subject to tax at 40% above tax-free threshold of 325,000. Inheritance is bequested to the child/children of Coventry. ? Coventry might live longer than 90 years but does not want to plan beyond 90. ? New laws now require young person to complete 3 more years mandatory University education after 18. ? Assuming inflation rate at 2% and Coventrys life expectancy 90 years. END OF CASE STUDY The case study is written and copyrighted by Dr Zhen Ye (Peter) Assignment Brief Template Page 3 of 7 This document is for Coventry University students for their own use in completing their assessed work for this module and should not be passed to third parties or posted on any website. Any infringements of this rule should be reported to [email protected] Criteria for Assessment The coursework is an individual report which weights 25% of overall module mark. A minimum mark of 35 percent is required for the coursework The student will write an individual report of 1500 words. The report should contain the following sections. ? Executive Summary (5%) ? Introduction (5%) ? Financial Planning (30%) ? Investment Advice (30%) ? Recommendation to Coventry (30%) ? References ? Appendix The percentage shown next to the section title shows a rough approximation of the weight for each section of the report in terms of words and is for general guidance rather than strict adherence. It is crucial that you include data, e.g. Excel financial models in the Appendix. If you do include Excel data, you can copy and paste from your Excel file to a table format. If the file is too big, you might want to send it to your seminar tutor before the submission. Excel cell with calculation should show the formula on the adjacent cell by displaying what is being calculated, e.g. using the function formulatext or VBA getformula so that the actual step of calculation can be verified independently. Alternatively, you can just provide a table and a formula. Marking rubrics is included in the next page. You should pay more attention to the criteria which has more weight and emphasize these criteria in your report. ? Demonstrate understanding of financial market and products through independent research (20%) ? Practical application and solutions to financial planning to answer case assignment questions (1) to (8) (30%) ? Demonstrate competence to make investment advices based on applied research on financial products (20%) ? Demonstrate the ability to integrate financial solution into creative, data driven problem solving results (30%)
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