FSC521: The Financial Services Industry - Roles of Key Market  Participants - Finance Assignment Help

Assignment Task :

  Learning Outcomes :

This assignment assesses the following learning outcomes: 

• Describe financial markets and systems, including the specific roles of key market  participants.  

• Analyse how key factors in the economic environment impact participants in the  financial services sector.

Task 1: Financial institutions and the tax system  

Sanjay currently earns $95,000 per annum and his total income has exceeded $90,000  for the past two years. He has inherited $50,000 and wants to place the money on term  deposit for 12 months. He’s asked you for advice on the range of financial institutions  that offer this product. 

a) To illustrate the range of providers for Sanjay: 

• Select three different types of financial institution currently operating in the  New Zealand financial services industry that Sanjay can place his money on  term deposit with. 

• For each financial institution, state their name and type of financial institution,  and provide a link to the page promoting term deposits. 

• Discuss the similarities and differences between the three financial  institutions you selected in terms of: 

• their structure/ownership 
•  how they’re regulated 
•  the services they provide. 

b) You explain to Sanjay that with some providers, he has the option of placing his  $50,000 on a term deposit or in a PIE Term Deposit Fund for 12 months. Both  products currently offer interest at 4% per annum and there are no fees payable for  either option. 

Assume Sanjay invests for the next 12 months, and that his salary remains at  $95,000. Also assume his income is derived only from his salary and this  investment. Calculate his total after-tax income (salary + interest) for each  investment option and clearly highlight which option provides him with the higher  after-tax income. Show all your workings.

Task 2: The impact of natural disasters and changes in the OCR  

Aroha runs a small business exporting cut flowers and foliage. A year ago, you helped  Aroha purchase her first home using a revolving credit facility. The current balance  outstanding on this facility is $451,250. She has sum insured home insurance cover  with Aotearoa Insurance. 

Aotearoa Insurance has a reinsurance treaty with Swiss Re.  

Aroha has seen the following two newspaper headlines: 

• Headline 1: ‘Inflation is rising and is expected to reach 5–6% in the next eighteen months’ 

• Headline 2: ‘Hurricane Fred in the United States and the earthquake in Japan set  to impact homeowners. 

She seeks advice from you on how these factors will affect both her business 

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