Part A: BHP and CBA Share Price
1. What is the current price of ordinary / common shares in BHP and CBA? How has each evolved over the past 5-years? Graph each series and discuss their evolution.
2. Select one item of news that may have affected systematic (market) risk and one item of news that may have affected unsystematic (firm-specific) risk. Explain how each of the news items have moved the share prices of both BHP and CBA.
Part B:Fiscal Policy, Monetary Policy and Debt Markets
1. Evaluate the current fiscal position of the Australian Federal Government. Briefly describe how you expect this to move over time.
2. Plot the current Australian yield curve for Commonwealth Government Securities (CGSs). At a minimum you should include the target cash rate, 90-day and 180-day rates, and the 2, 3, 5, and 10-year rates.
a. Briefly explain the shape of the yield curve, using Expectations Theory and the Segmented Markets Theory
b. How would you expect the movements in the fiscal position identified in B.1) to influence the yield curve?
3. Briefly describe the movements in the target cash rate from 2001 to 2017.