FNSINC601 - Apply Economic Principles to Work in the

Task Instructions

This assessment is designed for you to apply an understanding of economic principles to the operation of the Australian economy.

Students will gain an awareness and understanding of economic principles necessary to interpret economic events, apply economic principles to your work, and appreciate the impact of economics on their lives.

The research will enhance the students understanding of the operation of the $2.6 Trillion Australian Superannuation industry.

Students must demonstrate through the performance in the Assessment Tasks that they have all the required skills and knowledge as specified in the unit of competency (course) they are studying.

Instructions on submitting your project/portfolio/report

This assessment is competency based and a CAG (competent) must be achieved for this assessment. The assessment will be graded (once competency is achieved) according to the grading policy for assessments those being, CAG (competent), CC (credit), CDI (Distinction) or CHD (High distinction).

Your teacher will discuss the assessment matrix for each assessment with the class at the beginning of the semester and prior to the assessment taking place.

Statement of Purpose:
To be deemed competent in thisassessment, all of the competency criteria (all as detailed in this document) must be met by both the business report and the in-class presentation by each team.

Please refer to the detailed Case Study Assessment document which specifies the requirements.

Important:

1. Any task where the minimum has not been met, the student will have the opportunity to be deemed competent in the same indicator, that being the required knowledge, skill and elements/performance criteria (where applicable) via another task or assessment.

2. Following from point 1 above, where a student cannot be deemed competent via another task or assessment, they will be required to resit that task or the assessment in full in the final week of the semester, that being week 16. Please note that students only need to resubmit that part of the assignment deemed not yet competent.

3. Students who take more than one attempt to pass this assessment can only be given a (CAG) Competent upon passing from attempt two onwards.

4. Students are advised that they are likely to be asked to personally demonstrate their assessment work to their teacher to ensure that the relevant competency standards are being met. Students will be provided with feedback throughout the course to check their progress.

If deemed necessary students will be asked to recreate any part of their assignments at a prearranged time. On an individual basis the candidate will be required to successfully demonstrate how a specific outcome was delivered. Therefore although an assignment is to be completed in teams, team members must be knowledgeable on and familiar with ALL aspects of the assignments.

Section B
Apply Economic Principles to Work in the Financial Services Industry

Portfolio Exercises

The Situation:
Imagine that you work in an Australian branch of a foreign-owned investment firm.

Your company has expressed interest in establishing a local superannuation fund, and would like you to do some preliminary research into the Australian economy and its superannuation system.

The organisation requires up to date information and knowledge of how the Australian economy functions, performs and how it is regulated.

Required:
Read each of the following questions. Use all relevant sources of information to produce answers to each of the questions.

Relevant Sources of Information may include:
– The Australian Taxation Office website and publications (ato.gov.au/super)
– Superannuation fund websites (eg. colonialfirststate.com.au)
– The Treasury's Stronger Super website (strongersuper.treasury.gov.au)
– ASIC'sMoneySmart website (moneysmart.gov.au/superannuation-and-retirement)
– Recent newspaper/journal articles

1.1 Develop and apply knowledge of economic principles relevant to the industry

Portfolio Activity 1

a. "Should I invest in the property or share market?"
Construct a PPC curve to illustrate the concept of opportunity cost. Assume you have $1,000,000 to invest.

b. What is the opportunity cost of choosing the cash option against the balanced choice?
Construct a PPC curve to illustrate the concept of opportunity cost. Assume you have $200,000 in super.

c. Outline the difference between an accountant and an economist's view of profit? (see Pg 124 of text)

d. "The more you have in superannuation the better."
Is this a positive or normative statement?

e. Your employer wants to know what type of Economic system operates in Australia. Explain the main features of the Australian economy.
What are 3 advantages and disadvantages of this system?

f. Explain the impact on the product and factor markets if interest rates paid by the Banks exceed the returns on superannuation.
g. If the government decreases the tax benefits of super (macro) how will it impact on the micro economy (Superannuation firms)?

Portfolio Activity 2

Measuring the Share Market/Indices
Indices measure movement in the value of the market or various sectors of the market, and provide a broad outline as to how the market is performing.
a. What are the names of the indices used to measure the top 5 share markets worldwide?
b. Outline the difference between these two aggregates.
c. Print scree the current position of these 2 indices.
d. The companies listed on ASX are divided into two larger categories. Name them and give 5 examples of each and include their ASX listing name (e.g. AGLAGL ENERGY), what type of business and their current share price.
e. List and give Mkt Cap of the top 10 companies on the ASX. What is the total value?
f. Which is the largest company? Research their current Mkt Cap.
With reference to the relationship between the share price and Mkt Cap what is your conclusion?
g. Print screen a graph which shows the performance of their share price over the last year.
What line of business were they involved in?
h. Research the causes of this change in their share price?
i. Calculate the difference between their Mkt Cap today compared to their highest point in 2016.
j. Sketch a demand curves (correctly labelled) which demonstrates:
1.Change in laws that make superannuation more tax effective.
2. Reduced super tax concessions
k. Explain the impact this could have on alternate tax preferred savings vehicles include owner occupied housing and negatively-geared investment.
Sketch a graph which demonstrates the impact.

Elasticity
Income elasticity

l. As incomes rise in Australia what is the impact on the total amount of super?
Explain two factors which may reduce its growth.

Portfolio Activity 3

a) Which market structure does this market most closely resemble?
b. Prepare a graph outlining the % share of each of the 4 types of super funds. in the market.

c. Identify 10 Industry and 10 Retail funds.

d. Choose 1 Super fund from of each and compare them.
Construct a table and outline:
1. Investment options, select Balanced,
2. 1 & 10-year investment returns
3. Fees.

e. Explain why it is difficult to compare these two funds.

Market Failure
f. Read the articles above and explain why competition is not enough to drive down fees in this industry.
g. What are the assumptions associated with the use of this calculator?
h. Complete the calculation using the link above.
Assume your income is $50,000.

Q:a. "Should I invest in the property or share market?"
Construct a PPC curve to illustrate the concept of opportunity cost. Assume you have $1,000,000 to invest.

Q: b. What is the opportunity cost of choosing the cash option against the balanced choice?
Construct a PPC curve to illustrate the concept of opportunity cost. Assume you have $200,000 in super.

Q: c. Outline the difference between an accountant and an economist's view of profit? (see Pg 124 of text)

Q: d. "The more you have in superannuation the better."
Is this a positive or normative statement?

Q: e. Your employer wants to know what type of Economic system operates in Australia. Explain the main features of the Australian economy.
What are 3 advantages and disadvantages of this system?

Q: f. Explain the impact on the product and factor markets if interest rates paid by the Banks exceed the returns on superannuation.

Q: g. If the government decreases the tax benefits of super (macro) how will it impact on the micro economy (Superannuation firms)?
Note: Interest rate increases tend to lead to decreased demand for stocks as the risk-free rate of return rises.

Questions Portfolio 2
Q: a. What are the names of the indices used to measure the top 5 share markets worldwide?
Q: b. Outline the difference between these two aggregates.
Q: c. Print scree the current position of these 2 indices.
Q: d. The companies listed on ASX are divided into two larger categories. Name them and give 5 examples of each and include their ASX listing name (e.g. AGLAGL ENERGY), what type of business and their current share price.
Q: e. List and give Mkt Cap of the top 10 companies on the ASX. What is the total value?
Q: f. Which is the largest company? Research their current Mkt Cap.
With reference to the relationship between the share price and Mkt Cap what is your conclusion?
Q: g. Print screen a graph which shows the performance of their share price over the last year.
What line of business were they involved in?
Q: h. Research the causes of this change in their share price?
Q:i. Calculate the difference between their Mkt Cap today compared to their highest point in 2016.
Q: j. Sketch a demand curves (correctly labelled) which demonstrates:

1.Change in laws that make superannuation more tax effective.

2. Reduced super tax concessions
Q: k. Explain the impact this could have on alternate tax preferred savings vehicles include owner occupied housing and negatively-geared investment.
Sketch a graph which demonstrates the impact.
Q: l. As incomes rise in Australia what is the impact on the total amount of super?
Explain two factors which may reduce its growth.

Questions Portfolio 3
Q: a) Which market structure does this market most closely resemble?
Q: b. Prepare a graph outlining the % share of each of the 4 types of super funds in the market.
Q: c. Identify 10 Industry and 10 Retail funds.
Q: d. Choose 1 Super fund from of each and compare them.
Construct a table and outline:
1. Investment options, select Balanced,
2. 1 & 10-year investment returns
3. Fees.
Q: e. Explain why it is difficult to compare these two funds.
Q: f. Read the articles above and explain why competition is not enough to drive down fees in this industry
Q: g. What are the assumptions associated with the use of this calculator?
Q: h. Complete the calculation using the link above.
Assume your income is $50,000.
Print screen your answer.

Attachment:- Assessment Guide.rar


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