Question 1 (60 marks):Please read the following case study, think from Financial Management perspectives and broadly cover what we discussed in the class and structure your short answers in below format;

A)Please list your expected return for the following investment in different scenarios;

B)Please list the risks and discuss the impacts;

C)Why you go ahead with that investment by listing your recommendations;

Case Scenario:If you are a CFO who is responsible for your company's investment.World leading C Bank relationship manager came to you and offered you the following investment product; some key features are illustrated in below:

Auto callable Contingent Coupon Equity Linked Securities Linked to an Equally Weighted Basket of Four Underlying Due 31March2025;

Issuer:C Bank Group Global Markets Holding Inc.

Guarantee: All payments due on the securities are fully and unconditionally guaranteed by C Bank Group which is AAA Grade rating;

Underlying Company Stock

Weight

Advanced Micro Devices, Inc

25%

Square, Inc

25%

Tesla, Inc

25%

Zoom Video Communications, Inc

25%

Stated Principal amount: $1,000 per security;

Issue Date:31March2021

Pricing Date: 31March2021

Valuation dates:the 5^th Business day of each calendar month

Maturity date:31March2025 unless earlier redeemed

Coupon Payment: Monthly Dividend at 0.8333% p.m. roughly 10% unless the market value of any underlying company stock is not below 60% of the initial pricing as of 31March2021;

Payment at Maturity:If the securities are not automatically redeemed prior to maturity, callable when any of underlying stock price is below 60% of the initial pricing; If that is the case, your principal payment will be 60% of the initial purchase price + any of previous paid coupon;

Otherwise, your return will be the ending sales price - previous coupon payment- management fee as of 2%;However capped at 20% capital gain;