FINC5090 - Finance in the Global Economy

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FINC5090 - Finance in the Global Economy
Group Assignment Outline
Semester 1, 2025

Instructions

1. Read these instructions carefully.
2. This assignment is worth 25% of your total marks.
3. The due date is 09 MAY 2025. Submissions will be accepted until 23:59 on the due date.
4. DO NOT email your assignment if you miss the deadline.
5. Plagiarism is a serious offense and will result in zero marks and disciplinary action for all group members.
6. Include the correct Student IDs of all team members. Student IDs uniquely identify authors, and it is crucial that the marker knows who the authors are.
7. Number all pages.
8. The header (first) page of your assignment MUST CONTAIN the correct Student IDs of all team members. Including your names is optional.
9. Answer the questions directly (from page two onwards). Do not include unnec essary sections like table of contents, executive summary, etc. An abstract of 100 words is required and should summarize your whole assignment.
10. Use the APA referencing style. If you are unfamiliar with APA, refer to Google Scholar or manuals like the Chicago Manual of Style for guidance.
11. Write in single-spaced, Times New Roman font, size 12. Page margins should be 2.5 cm on all sides.
12. Adhere to the word limit strictly. Use the space wisely. The word limit is 2,500 words and applies only to the write-up of your analysis. This word limit excludesreferences, descriptions of tables or figures, and appendices (if you have any).
13. Submit your assignment in PDF format only.
14. IMPORTANT: Do not present your work in a newspaper-style story. This is an academic task, and your work should reflect academic rigor. Any statement that is not a fact must have a citation or should be based on your analysis. Do not cite random websites, blogs, or Wikipedia. Cite only peer-reviewed academic economics/finance journal articles or reputed periodicals like the Australian Fi nancial Review, the Economist, Time, or the Wall Street Journal.
15. IMPORTANT: This is a group assignment. Collaborate effectively with your team members, divide tasks appropriately, and ensure that each member contributes to the analysis and final report. Effective teamwork will enhance the quality of your work and the learning experience.

Task

Scenario and Objective

Your group has been hired by Green2 Capital, a global macro hedge fund that integrates sustainability considerations into its investment strategy. The fund’s CEO, A.

Green, is particularly concerned about the growing financial risks and opportunities associated with sustainability factors.

Green2 Capital seeks to develop a country-level sustainability metric that consolidates relevant sustainability indicators aligned with the United Nations Sustainable Development Goals (SDGs). This metric will be a key input in the fund’s sovereign bond investment decisions across OECD countries.

Your task is to compute a Sustainability Index (SI) to rank OECD countries based on their sustainability performance. The SI should provide a clear and interpretable measure of each country’s commitment to sustainability and its implications for longterm investment attractiveness.

Your team must submit a written report detailing the approach to measuring the

Sustainability Index and highlighting its advantages and disadvantages to ensure yourclient fully understands this metric. The report should provide a clear explanation of how the index is constructed and why it helps evaluate long-term investment attractiveness.

The final report must be presented to the Green2 Capital’s management by 11:59 PM on the 9th of May 2025, and it must have an analysis focusing on the following:

1. Abstract (strictly 100 words)
2. Introduction (≈ 600 words)
3. Data Description and Justification of Chosen Metrics (≈ 500 words)
4. Approach to Measurement and Economic Justification (≈ 1000 words)
5. Conclusion and Recommendations (≈ 300 words)
6. References
7. Main Tables
8. Main Figures
9. Appendix Tables
10. Appendix Figures

While the word limits are guidelines rather than strict requirements, your report must include all the above sections. Any additional analysis, supporting computations, or robustness checks substantiating your findings should be included in the Ap pendix rather than the main report. All references, tables, figures are not part of the word count.

Data Sourcs

OECD Economic and Environmental Indicators
OECD Data Explorer
World Bank Data
Transparency International
Our World in Data
IMF International Financial Statistics
United Nations - Sustainable Development Goals

Please consider starting early and making sure that you explore these data sources. Note that these are potential data sources; you may use one, two,· · · , or all of them. The assignment is about your ability to think critically and analyze information, not your ability to work with large datasets. Prioritize the data sources that provide the most relevant information for your analysis. Please speak to the teaching staff, even if you have the slightest doubt.

Methodology

Our inspiration is La Porta et al. (1998), where the authors compared countries using two single metrics—shareholder rights and creditor rights. Following this, our aim is to highlight an approach rather than the approach. We will discuss the data sources and potential methodologies collaboratively in tutorials during Weeks 6-9. Make sure you attend those tutorials. If you cannot attend, you can always use consultation hours in any of the weeks for any clarification questions.

Porta, R. L., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance.

Journal of Political Economy, 106(6), 1113-1155.

Rationale, Challenge, and Help

This assignment offers a unique opportunity to bridge the gap between theoretical knowledge and real-world application. By engaging in this project, you will gain insights into the global nature of finance and understand how various factors interact in evaluating investment opportunities. Working with real-world data from sources such as the OECD, World Bank, and International Monetary Fund ensures that your analysis is grounded in current, relevant information, enhancing its practical value.

Additionally, this assignment highlights the growing importance of sustainability in financial decision-making. The increasing industry focus on sustainability-related metrics alongside traditional economic indicators means mastering this analysis will prepare you for future career demands. Beyond technical skills, this project will challenge you to think strategically about how different variables influence investment outcomes, fostering critical thinking and decision-making skills.

This assignment is challenging but rewarding. You will need to conduct a compre hensive analysis of multiple countries based on diverse and sometimes conflicting in-dicators. Gathering, synthesizing, and interpreting data from various sources requires analytical and research skills and the ability to discern the most relevant information.

Developing a composite sustainability metric will push you to justify your method ological choices and ensure the robustness of your ranking system.

One of the key challenges is that reality is complex—life rarely provides clear, perfect answers or data that fit neatly into a framework. You won’t always have 100% certainty in real-world decision-making, and this assignment is designed to help you embrace that uncertainty. It is an opportunity to think outside the box, apply your analytical skills, and integrate your financial knowledge innovatively. This is also a chance to learn how to collaborate effectively, ask thoughtful questions, and seek guidance when needed.

While this project is demanding, you are not alone. Help is available during tutori als and consultation hours, where we will discuss potential methodologies and address any challenges you encounter. Engaging with your peers and teaching staff, exploring different approaches, and adapting your thinking will make you a stronger analyst and decision-maker.

By taking on this challenge, you will gain invaluable experience in handling complex, multidimensional data and making strategic investment decisions. This is the kind of thinking required in global financial markets—where uncertainty is constant, but those who can analyze, adapt, and collaborate succeed.

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