Tuesday, February 18, 2020

Investment Analysis of BHP Billiton Company Case Study

Investment Analysis of BHP Billiton Company - Case Study Example This research will begin with the statement that Commonwealth Bank of Australia is a company that is based on Sydney Australia, it as founded in 1911 and its main line of business is provision of various banking and financial products and services to retail, small businesses corporate customers as well as institutional customers in Australia, New Zealand, the Asia pacific region, United Kingdom and the United States. An event study was carried out to determine the impact of the announcement of the 25 basis points decrease in cash rate by the Reserve Bank of Australia on 6th December 2011. The event window used to carry out this event study is the 10 days before the event announcement date, the event announcement date and the 10 days after the event announcement date denoted as day -10 to day +10 and the event announcement date is day zero. The estimation period on the other hand is period between day -510 and day -11. The closing adjusted weekly prices for the Commonwealth Bank of Au stralia and the all ordinaries index were obtained from yahoo finance for the estimation period and the closing adjusted daily prices were also obtained from yahoo finance for the event window. The all ordinaries index represents the market returns. The weekly returns of the Commonwealth Bank of Australia and the weekly logarithmic returns of the All Ordinaries Index were calculated using the formula ln (Pt/Pt-1) where Pt is the adjusted closing price of the security at time t and Pt-1 is the adjusted closing price of the security at time t-1.... indicating that regressing the returns of the CBA on those of the All Ordinaries index would yield a better result that will incorporate the effect of the outliers (Uliana Flynn & Correia, 2007). The regression result is as shown in table below. As shown in the table above, the value of alpha as represented by the intercept is equivalent to 0.00094 while the value of beta is equivalent to 1.00742. This indicates that the regression equation representing the relationship between the CBA returns and the Market returns as represented by the All Ordinaries Index is equal to Y = 1.00742x + 0.00094. This is the market model where Y is the dependent variable which is the expected returns of the Commonwealth Bank of Australia during the event window while x is the independent variable which is the market returns during the event window and alpha is the constant which is otherwise referred to as the intercept (Uliana, Flynn and Correia, 2007). Market model adjusted abnormal returns The market model adjusted abnormal returns is equivalent to the difference between the expected returns and the actual returns of Commonwealth Bank of Australia during the event window. The abnormal returns are the accumulated to arrive at the cumulative abnormal returns of the Commonwealth Bank of Australia during the event window as shown in the table below; As shown in the table above, the abnormal returns are given by the actual returns minus the expected returns of the Commonwealth Bank of Australia during the event window. The expected returns are calculated using the market model shown above. Findings As shown in the market model above, the beta of the Commonwealth Bank of Australia is equivalent to 1.0074 indicating that it is a growth stock because it has a beta that is more than one. In

Monday, February 3, 2020

The travels of a t-shirt in the global economy by Pietra Rivoli, Ph.D Essay

The travels of a t-shirt in the global economy by Pietra Rivoli, Ph.D - Essay Example In the preface, the author guides to the preview of the protests against cotton materials. The protests attribute the cotton industry to abuse of human rights. Protesters called backlash in the book refuse to buy t-shirts made from cotton because of the perception that cotton industry involves in child labor, human trafficking, unfair employment terms, and unsustainable compensations. The student protesters joined other human rights activists to campaign against global trade conferences. The reasons for the oppositions were that globalization is the reason behind maltreatment of workers in cotton and other industries. In the book, Pietra Rivoli seems to want to dismiss or challenge the idea that anti-cotton protesters have towards globalization and international trade. Majority of the impactful protesters are Americans who seem to curse the way the global cotton industry operates to make t-shirts available. To the protesters, before the t-shirt they buy reaches the market, it passes through child labor, underpaid workers, and poor working conditions (Rivoli VI). However, the book acknowledges that the success of the American cotton industry partly depends on the cheap labor obtained through slavery. Cotton growing is a big economic and agricultural activity in the Southern frontier. Wealthy people rank according to the hectors of cotton farm owned and the quantity of cotton possible harvested from the farms. The significance of the US cotton industry is comparable to the Swiss pharmaceutical industry, Japanese automaker industry, and the Germany chemical industry. Unfavorable climatic conditions in the industrialized countries make it hard to produce cotton in large quantities. It is for the reason that America does not have a serious competition that would come from producers of similar status (Rivoli 4). This state leaves America to compete some of the