QUEEN MARY UNIVERSITY OF LONDON

SCHOOL OF ECONOMICS AND FINANCE

ECN107 FOUNDATIONS OF FINANCE

Group Presentation (20% of total mark) maximum duration 15 minutes.
The deadline for this assessment is on April 3rd @ 5pm

Efficient diversification entails constructing portfolios that offer the lowest possible
risk for any given level of expected return. As described by Nobel Prize winner Harry
Markowitz, it is the only “free lunch” in investing. However, not everyone shares this
view. In a widely available YouTube video1, renowned investors Warren Buffett, Mark
Cuban, and Charlie Munger argue that “diversification is a protection against
ignorance and if you know what you're doing, it isn't necessary”.

For this assignment you are required to prepare a video presentation of a maximum
duration 15 minutes. If a presentation exceeds the indicated maximum time, then
the examiners will not mark the excess material. There is no penalty for a
submission being below 15 minutes, unless of course its brevity leads to substantive
problems with the work.

Presentation structure and assignment brief:

The first slide will serve as a title slide, featuring the module code, module name,
and the names of all group members, alongside their respective student IDs, as
follows:

Title Slide:
Module Code: [Insert Module Code]
Module Name: [Insert Module Name]

Group Members:
[Name 1] - Student ID: [Insert Student ID]
[Name 2] - Student ID: [Insert Student ID]
…

The presenter is required at the beginning of the video presentation to verbally

announce each member's name and corresponding student ID number.

Presenters are required to have their cameras on when presenting so that the
markers can see who is presenting. The slide should occupy most of the screen to
ensure legibility for the markers, while the presenter's window should be displayed in
a smaller size.

Section A of the presentation (5-7 slides and 50% of total mark): In this section
you are required to provide a debate on the pros and cons of diversification. This
debate needs to be placed in the appropriate academic and practitioner-relevant

1
Intelligent Money Investing (2019). Why Buffett, Cuban and Munger all HATE Diversification: World's
Greatest Investors [YouTube channel]. Retrieved February 20th, 2024,
https://www.youtube.com/watch?v=ibSp1xzLfy8

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context. It is important, therefore, to establish theoretically the advantages and
disadvantages of diversification, and discuss findings of researchers on the
implications of diversification for shareholders and financial institutions. This section
must be designed to span 5-7 slides and must be delivered over a duration of 5-7
minutes. This part needs to derive from review and analysis of the relevant academic
literature, and all arguments need to be supported with references to the theoretical
principles and academic literature. It is a requirement that you base your analysis in
this section on at least 5 appropriate sources. You need to use your skills at
reasoning and arrive at a conclusion regarding the relative benefits and
disadvantage of diversification for individual investors and financial institutions. This
is a research-based assignment/presentation, and examples of appropriate sources
that you should refer to are books, and academic journals. All sources of information
should be fully cited in alphabetical order in the ‘References’ section, which should
be included at 1-2 (or as many as you need) slides in the end of your video
presentation titled ‘References’.

An example of how references should be included in your presentation can be seen

in slide 13 of Lecture 5 slides.
---
Hedging allows investors assess managers’ performance as it clears the noise in
cash flows and earnings that is not due to managers’ actions (DeMarzo and Duffie,
1995).
---

Journal references should be cited in the ‘References’ slide(s), as follows:

Lins, K., & Servaes, H. (1999). International Evidence on the Value of Corporate
Diversification. The Journal of Finance, 54(6), 2215–2239.
http://www.jstor.org/stable/797992

Book references should be cited in the bibliography as follows:

Arnold, G., 2019. Corporate Financial Management, 6th Ed., Pearson Education.

AI tools and Large Language Models should be cited in the bibliography as follows:
OpenAI. (2024, month day). [ChatGPT response to the prompt “_____”].
https://chat.openai.com/
-in presentation text- OpenAI (2024)

Newspaper articles should be cited in the bibliography as follows:

The Economist (2023) How the young should invest. 16 Nov. Available
at: https://www.economist.com/finance-and-economics/2023/11/16/how-the-young-
should-invest [Accessed 22 February 2024].
-in presentation text- The Economist (2023)

You don't need to read out loud the slide(s) labelled 'References', but please ensure
they are shown in the video briefly, allowing the marker to pause and review the
references used.

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Section B of the presentation (4 slides and 25% of total mark): Assume that you
are an investor, and you are given the opportunity to invest to 2 of the following
stocks and funds:
• FMAGX - Fidelity® Magellan® Fund (Yahoo symbol FMAGX)
• FLPSX - Fidelity® Low-Priced Stock Fund (Yahoo symbol FLPSX)
• BSCFX - Baron Small Cap Fund Retail Class (Yahoo symbol BSCFX)
• Prologis, Inc. (Yahoo symbol PLD)
• McDonald's Corporation (Yahoo symbol MCD)
• Berkshire Hathaway Inc (Yahoo symbol BRK-B)
• Amazon.com Inc (Yahoo symbol AMZN)2

Using the past 5 years’ monthly adjusted closing prices of these stocks, retrieved
from Yahoo Finance, you calculated their annualised expected returns and standard
deviation of their returns:3

FMAGX FLPSX BSCFX BRK.B MCD PLD AMZN

Expected 14.26% 11.10% 10.23% 14.13% 10.82% 15.03% 13.88%
Returns
Standard 23.15% 24.12% 27.61% 20.39% 18.81% 27.05% 31.79%
Deviation

And their correlation coefficients:

FMAGX FLPSX BSCFX BRK-B MCD PLD AMZN

FMAGX 1.000
FLPSX 0.570 1.000
BSCFX 0.672 0.610 1.000
BRK-B 0.572 0.669 0.577 1.000
MCD 0.586 0.537 0.578 0.545 1.000
PLD 0.622 0.528 0.577 0.501 0.552 1.000
AMZN 0.642 0.405 0.530 0.426 0.294 0.500 1.000

For this section of the presentation, you are required to:

• Provide one slide outlining the rationale behind selecting two specific stocks,
from those given above, for inclusion in the portfolio, while also explaining the
exclusion of the other options.

• Create a slide illustrating the investment opportunity set for various allocations
of the two stocks within the portfolio.

2
Following the links above on the names of the stocks, you can view the full business profile of the
companies as well as the investment style and objective of the funds.
3
To annualise expected returns, you multiply the average monthly returns by 12, and to annualise
standard deviation you multiply the standard deviation of monthly returns by the square root of 12.

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 • Create a slide explaining which portfolio from the investment opportunity set
you are willing to invest to, along with a clear explanation of the rationale
guiding this decision.

• Develop a slide discussing how the investment strategy would be altered if the
option to invest in a risk-free asset were available alongside the portfolio
comprising the two selected stocks.

Section C (2-3 slides and 25% of total mark):

In your main textbook, you will encounter the following quote regarding companies'
decisions to diversify their activities: “the fact that diversification is good for investors
does not mean that companies should pursue it.” In two or three slides, you are
tasked with rebutting this argument and presenting an example demonstrating the
benefits of diversification for companies. This part needs to derive from review and
analysis of the relevant academic literature, and all arguments need to be supported
with references to the theoretical principles and academic literature. There is no
minimum number of sources that you can refer to in this section.

Penalties for late submission:

If an assignment is submitted after the specified deadline, it shall be recorded as late

and a penalty shall be applied, unless there are valid extenuating circumstances, it is
strongly advised that you submit before the deadline. For every period of 24 hours,
or part thereof, that an assignment is overdue there shall be a deduction of five per
cent of the total marks available (i.e., five marks for an assessment marked out of
100). After seven calendar days (168 hours or more late) the mark shall be reduced
to zero, and recorded as 0FL (zero, fail, late).

Deadline and submission:

The report must be submitted as a single file on QMplus by 3rd of April at 5pm.
Once you form a group then you can see the submission link. Only one submission
per group.

Marking criteria:

See the UG Economics and Finance marking criteria and scale

Below you can find the rubric which will be used for marking this presentation:

PRESENTATION RUBRIC
4 3 2 1 0
ORGANISATION (10%)
Presents information in a well-organized, coherent, and
cohesive way. Connects all topics and touchpoints in a
logical manner. Reader/audience can easily follow the flow
of reasoning. Maintains a professional tone that is
appropriate for the topic and scope of the presentation.
Highly visually appealing and engaging with figures from
data analysis appropriately incorporated into the
presentation.

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USE OF REFERENCES (10%)
Presents factually compelling evidence to support the
argument. Cites authoritative sources that can be
legitimately vetted. Attributes references to peer-reviewed
journals, professional materials by experts in the field of
focus, or other approved sources. Uses consistent
formatting regarding attributions.
CONTENT (30%)
Outstanding command of subject matter. Relevant, telling,
original, quality details give important information, going
beyond the obvious or predictable. Successfully and critically
identifies key issues. All information employed in discussion
is discriminately chosen and most relevant going beyond
routine and pedestrian contexts or level of complexity.
Outstanding work which meticulously describes the topic
using literature and information discriminately chosen
demonstrating a depth of understanding. Provides
compelling analytics and knowledgeable unification of multi-
disciplinary principles and concepts among cross-functional
areas.
ANALYTICAL / CRITICAL THINKING SKILLS (40%)

Highly competent use of knowledge and data, which display

ability to work beyond routine contexts or levels of
complexity. Highly capable of applying theories, practices,
and principles to the analysis of the research topic, concept,
and business data. Establishes key points for examination
and identifies their implications beyond routine contexts or
levels of complexity. Constructs well-organized, relevant
presentation, using appropriate hierarchy/outline of
information. Develops and justifies potential solutions and/or
conclusions by accurately and successfully applying relevant
research methods, models, frameworks, techniques, and/or
theories. Potential solutions and/or conclusions consist of
compelling, exhaustive, comprehensive, verifiable
information from multiple sources including real-world
examples, company data, and empirical evidence from
journal articles. Data visualisations are insightful, relevant,
describe accurately the analysis and allows drawing out
recommendations for business implications.
CONCLUSIONS (10%)
Come to a final conclusion or recommendation, basing your
decision on what you judge to be the most important factors
and justify how you have made your choice.

RUBRIC SCORING GUIDE SCORE

Expectations fully met and exceeded 4
Expectations met 3
Basic standards met 2
Basic standards PARTIALLY met 1
Minimum standards not met 0

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Group formation.

Each group can have from 2 to 5 members. You must form your groups by March
15th at 17:00. If you do not select a group by that day, you will be assigned to
one randomly by the module organiser. After that day the groups cannot
change.

If you prefer that I allocate you to a group please put your name and Student Id
by completing this form by March 15th at 17:00.

Peer Assessment

• Peer assessment is a crucial element of group work. This is a group project, and
we expect that you will be able to work smoothly with each other and that you will
present a piece of work that reflects your efforts as a team. Although it is your
responsibility to make sure that the group works smoothly, it is essential to
include a form of peer assessment by which group members can hold one
another accountable for their respective contributions.
• Each member of the group will be asked to submit an online form where they will
assess their own contribution to the work as well as the contribution to the work
of their peers. The assessments of the group members will be used to determine
the individual grade of each member of the group. You are not asked to make an
academic judgement about the quality of each other’s work. Assess how the
group worked together. Up to 10 marks might be deducted from your overall
grade if your peer’s assessment suggests little effort and/or non-attendance in
group meetings.
• All presenters must participate equally in the preparation and delivery of the
presentation. All members must present a part of the presentation. If not, there is
a penalty of 10 marks on the student(s) of the group who did not present.
• Each team member will have to fill in the following online form by 5 pm on 3rd of
April. Team members of a group who do not fill in the form will be subject to a 5-
mark penalty (out of 100).
• If a student submits the report alone without a group, then automatically they are
subjected to 15 marks penalty, as there is a 5-mark penalty for not submitting the
peer review, and a 10-mark penalty for not receiving a peer review.

FILL IN THE SELF- AND PEER-ASSESSMENT FORM HERE

• The information you should expect to find in the online form is the following:

Self- and Peer-Assessment of Group Report ECN107

Each member of the group is required to assess their own contribution to the work as
well as the contribution to the work of their team members. The assessments of the
group members will be used to determine the individual grade of group member. You
are not asked to make an academic judgement about the quality of each other’s
work. Assess how the group worked together. Up to 10 marks might be deducted
from your overall grade if your peer’s assessment suggests little effort and/or non-
attendance in group meetings.

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For example, assume that the group report is assigned a grade of 65%. If in your
self-assessment you rate your work with 4, but your peers rate you with 1, then the
module organizer will discuss with all group members and assess the contribution of
each one of you. If the student, who is rated by their peers with 1, cannot show their
contribution they will be graded with 55% (a penalty of up to 10 marks). We trust that
your peer assessment will be as fair as possible. We expect all group members to
work well with each other and we do not need to apply any penalties. Each student
must keep a ‘work log’ during the group assignment documenting their own efforts
and contributions.

SCORING GUIDE SCORE

Expectations fully met and exceeded 4
Expectations met 3
Basic standards met 2
Little effort; Minimum standards not met 1

How would you score the quality of your contribution to the group presentation?
SCORE (1-4)
A. Dependable attendance at meetings
and timely response to group
communication
B. Meaningful contribution to the group
work
C. Smooth cooperation with other group
members

Please state the name of the team member you are evaluating:

Has this team member presented? Yes/No

How would you score your team-mate's contribution to the group presentation?
SCORE (1-4)
Dependable meeting attendance and
response to group communication in a
timely fashion
Making an effort to contribute
meaningfully to the group work
Cooperation with other group members

How to make a video presentation:

Each group needs to submit a video of their presentation. Here you can find
instructions on how to submit an assignment. Here you can find instructions on how
to make recordings with Kaltura Capture and QMplus Media.

You are free to use any software to create the video. Microsoft PowerPoint has a
very useful recording function. You can find information here. With MS PowerPoint

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you can record individual segments of your presentation using MS PowerPoint and
then merge them together before exporting the final video. Check before uploading
that the audio and video quality are good. It is a requirement that camera is on when
presenting so that the presenter can be seen by the marker.

A good slide in a presentation assignment should:

When prompted with “A good slide in a presentation should”, ChatGPT generated

the following points (OpenAI, 2024).4

• “Be visually appealing: Use clear fonts, appropriate colours, and engaging
graphics to enhance readability and interest.

• Convey key points: Present concise, relevant information that reinforces the
speaker's message without overwhelming the audience.

• Maintain simplicity: Avoid clutter and excessive text or images that can distract
from the main content.

• Follow a clear structure: Organize content logically with headings, bullet points, or
visual cues to guide the audience through the information.

• Support the speaker: Complement the presenter's verbal delivery by providing

visual reinforcement and aiding in understanding complex concepts.”

All excellent instructions!

4OpenAI. (2024, March 2). [ChatGPT response to the prompt “A good slide in a presentation should”].
https://chat.openai.com/