RR Ltd has recently established a private pension scheme for its employees and the financial manager has asked you to provide a short report on why diversification generally leads to a reduction in risk relative to return.

Jamez

12 Feb 2026 • 15 min read

	UNIVERSITY OF SUNDERLAND
LEVEL	7
MODULE:	Corporate Governance and Financial Management
ASSIGNMENT CODE:	MGTM04
Submission Date:
Assessment weight:	100% of module
Outcomes Assessed:	All module learning outcomes, knowledge, and skills are
	assessed in this assignment.

This assessment is in two parts, please answer all elements.

The assignment carries a weighting of 100% and students should write 4000 words (+10%). It is recommended that this section of the assignment be completed using Microsoft Word.

Submission.

The submission date for the assignment is 16th May 2025

Students are required to submit their coursework through CANVAS. Only assessments submitted through CANVAS will be marked. Any other submission, including submission to your study centre in hard copy will be treated as a non-submission.

There will be only one Turnitin submission box for Part A and Part B respectively. Part A and B answers should be submitted as One Microsoft Word document showing ALL your workings clearly.

Please note that this is an individual assignment and the policy of the University on “Policy on Cheating, Collusion and Plagiarism” applies.

THE FRONT COVER OF YOUR ASSIGNMENT MUST SHOW:

1. Your name.

2. Your student registration number.

3. Your Programme of Study (e.g., MSc Finance and Management)

4. The word count for Part A&B (excluding the reference list, bibliography, and any appendices).

5. The name of your MGTM04 module leader/ Tutor and your programme leader.

Notes and Guidance

To obtain a high mark, you should

a) Make your report concise, precise and well-presented and structured.

b) Draw logical conclusions from accounting information.

c) Synthesise information in a coherent and useful way.

d) Show evidence of key text and background reading.

e) Incorporate your knowledge into an integrated piece of work.

f) Demonstrate critical understanding of financial management.

A Harvard standard referencing is required for this assignment.

For further guidance, please see page 8.

Part A

Requirements

1) Blockchains represent a novel application of cryptography and information technology to age-old problems of financial record keeping, and they may lead to far reaching changes in Corporate Governance. Many major players in the financial industry have begun to invest in this new technology.

Create a report where you will evaluate why good corporate governance is important for a business and how Blockchain technology can reduce corporate governance issues caused by fraud and the principal-agent problem.

(Approximately 800 words, 20%)

In this section students should demonstrate understanding, knowledge, and an ability to critically evaluate the differing theoretical viewpoints associated with the topic. The response should attempt to incorporate a critical perspective through relevant academic referencing, rather than overly describing the topic. Attempting to evaluate within a practical, real-life business context through investigation of academic empirical findings will assist in de

Part B

Synopsis

It has been three months since your promotion to assistant financial manager at fashion company RR Ltd. RR Ltd is a fashion retailer listed on the AIM market. The firm was founded 10 years ago, after a short and successful period as a partnership between Rebecca and Roy Race. The company has grown rapidly and has two successful own brand labels, ‘RR’ catering for the middle-income woman’s market and ‘Racey’ aimed at younger women.

RR Ltd distributes its two major seasonal lines (spring/summer and autumn/winter) under the ‘RR’ label and its young women’s label ‘Racey’ through major high street retailers in the UK and United States. Sales are also generated through exhibits of new collections at clothing exhibitions and through a fledgling, but not dynamic online presence, and very occasional webcast fashion shows.

Task 1

RR Ltd has recently established a private pension scheme for its employees and the financial manager has asked you to provide a short report on why diversification generally leads to a reduction in risk relative to return. This report will be made available on the company website to inform employees on how the pension scheme manages both risk and return when selecting investable assets (including reference to forms of risk, covariance and CAPM). You will need to use the Portfolio that you have created using London Stock Exchange simulator to explain how a pension fund can minimise risk through diversification.

(Approximately 1000 words, 25%)

Task 2

Currently, the management at RR Ltd are in preliminary decisions on a horizontal acquisition of ‘Sporty PLC’. Sporty PLC has an established men’s fashion brand; however, it is seen as a ‘Problem Child’ evidenced by relatively low market share in an industry segment that is experiencing growth. Industry analysts believe declining sales is principally due to not anticipating current tastes/trends and the financial manager has approached you for information on what value to place on Sporty PLC.

If the acquisition takes place, Sporty PLC will operate as a separate entity within RR Ltd. Existing designers at RR Ltd are very knowledgeable on the female market and believe they can transfer these skills to men’s fashion. Also, Roy Race is an ex-professional footballer and is passionate about men’s sport/casual wear. Both Rebecca and Roy are confident that synergies will improve economies of scale and scope, quality and in the medium-term, key performance ratios for Sporty PLC will be comparable to RR Ltd. RR Ltd’s share price is currently £12.00, and the company’s earnings per share stand at 30p. RR Ltd’s weighted average cost of capital is 12%.

The board estimates that annual after-synergy benefits resulting from the takeover will be £9m, that Sporty’s distributable earnings will grow at an annual rate of 6% and that duplication will allow the sale of £36m of assets, net of corporate tax (currently standing at 30%), in a year’s time. Information relating to Sporty PLC:

	Financial Position Statement of Sporty PLC.
		£m
Non-Current Assets	40
Current Assets		78
	118
Equity:
Ordinary Shares (£1)	40
Reserves			3
	43
Long-Term Debt	10
Current Liabilities		65
Total Liabilities	118

Required:

1) Given the information above, calculate the value of Sporty PLC using the following valuation methods:

a) Price / Earnings Ratio. (using RR Ltd’s P/E ratio)

b) Dividend valuation method.

c) Discounted cash flow

Based on your calculations, justify the value of Sporty PLC and the stated motives for this acquisition.

(Approximately 1,000 words, 25%)

(8 marks for calculation and 17 for the written part)

Task 3

Designs for RR Ltd’s fashion lines are created inhouse and manufacturing takes place across numerous locations in Birmingham, however the company is keen to expand into Asian-Pacific markets and is considering a small manufacturing base in Vietnam.

The project will have an initial outlay of £1m and a 0.5 probability of producing a return of £800,000 in Year 1 and a 0.5 probability of delivering a return of £600,000 in Year 1. If the £800,000 result occurs, then the second year could return either £500,000 (probability of 0.8) or £300,000 (probability of 0.2). If the £600,000 result for Year 1 occurs, then either £600,000 (probability 0.7) or £400,000 (probability 0.3) could be received in the second year. All cash flows occur on anniversary dates. The discount rate is 12%

Required:

1) Calculate:

a) The expected NPV.a

b) The standard deviation of NPV.

c) The probability of the NPV being less than zero assuming a normal distribution of return

– (bell shaped and symmetrical about the mean).

2) Based on your analysis of the macroeconomic risk factors, you believe that if the project was delayed by a year, RR Ltd would be able to improve the accuracy of the Year 1 probability estimates, which could lead to a reduced initial outlay and discount rate.

Upon finishing your calculations, a colleague states that the ‘traditional NPV method is just as effective as an NPV method incorporating probabilities and real option perspectives’. Critically evaluate this statement.

(Approximately 1,200 words including calculations, 30%)

(12 marks for calculations and 18 for written part)

Guidance:

Students are encouraged to be inquisitive and innovative in their approach as to what should be included in this report the following may be of some use in providing guidance as to what could possibly be included, although this is in no way meant to be prescriptive.

As part of your work you should explore the underlying theory behind the key areas of investigation that you identify and appropriately referenced comments and quotes to sources to demonstrate wider reading.

Additionally, the inclusion of some practical/real world examples to act as support/explanation for your evaluative comments is encouraged. Numerical example for illustrative purposes may be of use but should not be the only element of the work; discussion and interpretation of models and concepts is also required.

With a word limit of about 4,000 you do not have a lot of room for long introductions so assume that you are writing to an audience who has a working knowledge of corporate financial management.

Please avoid relying too heavily on descriptive sections reproducing information available from the set text. It is your own logical, evaluation of the situation, the interpretation of course material and presentation, with critical analysis, of a coherent strategic report that will attract high marks.

Please note that the company names are fictitious and do not exist.

Word Limit:

The word count must be stated on the front page of your assignment.

Summarising and compressing the information in your assignment into the word limit is one of the skills that students are expected to acquire and demonstrate as part of the assignment process.

The word count does not include:

• Title page

• Reference list/Bibliography

• Appendices

• Appropriate tables, figures and illustrations

Please note, in text citations [e.g. (Smith, 2011)] and direct secondary quotations [e.g. “dib-dab nonsense analysis” (Smith, 2011 p.123)] are included in the word count.

The Use of Tables

Tables should not include large amounts of text which represent the main discussion and arguments, as these should be included in the main body of your work.

If tables are used inappropriately in this way the wording in question will be deemed to be part of the main body of the work and included in the word count (with the relevant penalty imposed where the maximum word count has been exceeded).

Categories

Grade

Relevance

Knowledge

Analysis

Argument and Structure

Critical Evaluation

Presentation

Reference to Literature

86 –

The work examined is exemplary and provides clear evidence of a complete grasp of the knowledge, understanding and skills appropriate to the Level of the

100%

qualification. There is also unequivocal evidence showing that all the learning outcomes and responsibilities appropriate to that Level are fully satisfied. At this level it is

expected that the work will be exemplary in all the categories cited above. It will demonstrate a particularly compelling evaluation, originality, and elegance of argument,

interpretation or discourse.

76-85%

The work examined is excellent and demonstrates comprehensive knowledge, understanding and skills appropriate to the Level of the qualification. There is also

excellent evidence showing that all the learning outcomes and responsibilities appropriate to that level are fully satisfied. At this level it is expected that the work will be

excellent in the majority of the categories cited above or by demonstrating particularly compelling evaluation and elegance of argument, interpretation or discourse and

some evidence of originality.

The work examined is of a high standard

and there

is evidence of comprehensive knowledge, understanding and skills appropriate to the Level of the qualification.

70 –

There is clearly articulated evidence demonstrating

that all the learning outcomes and responsibilities appropriate to that level are satisfied

At this level it is expected

75%

that the standard of the work will be high in the majority of the categories cited above or by demonstrating particularly compelling evaluation and elegance of argument,

interpretation or discourse.

Directly relevant to

A substantial

Comprehensive

Well supported, focussed

Contains distinctive

Well written, with

Critical appraisal of up-to-

60 –

the requirements

knowledge of

analysis - clear

argument which is clear

or independent

standard spelling

date and/or appropriate

69%

of the assessment

relevant material,

and orderly

and logically structured.

thinking; and begins

and grammar, in a

literature. Recognition of

showing a clear

presentation

to formulate an

readable style with

different perspectives.

Pass

grasp of themes,

independent position

acceptable format

Very good use of a wide

questions and

in relation to theory

range of sophisticated

issues therein

and/or practice.

source material.

Some attempt to

Adequate

Significant

Generally coherent and

May contain some

Competently

Uses a good variety of

50 –

address the

knowledge of a fair

analytical

logically structured, using

distinctive or

written, with only

literature which includes

59%

requirements of

range of relevant

treatment which

an appropriate mode of

independent thinking;

minor lapses from

recent texts and/or

the assessment:

material, with

has a clear

argument and/or

may begin to

standard grammar,

appropriate literature,

may drift away

intermittent

purpose

theoretical mode(s)

formulate an

with acceptable

including a substantive

from this in less

evidence of an

independent position

format

amount beyond library

focused passages

appreciation of its

in relation to theory

texts. Competent use of

significance

and/or practice.

source material.

40 –

Some correlation

Basic

Some analytical

Some attempt to construct

Sound work which

A simple basic style

Evidence of use of

49%

with the

understanding of

treatment, but

a coherent argument, but

expresses a coherent

but with significant

appropriate literature

requirements of

the subject but

may be prone to

may suffer loss of focus

position only in broad

deficiencies in

which goes beyond that

the assessment

addressing a

description, or to

and consistency, with

terms and in uncritical

expression or

referred to by the tutor.

but there are

limited range of

narrative, which

issues at stake stated only

conformity to one or

format that may

Frequently only uses a

instances of

material

lacks clear

vaguely, or theoretical

more standard views

pose obstacles for

single source to support a

irrelevance

analytical

mode(s) couched in

of the topic

the reader

point.

purpose

simplistic terms

35 –

Relevance to the

A limited

Largely

A basic argument is

Some evidence of a

Numerous

Barely adequate use of

39%

requirements of

understanding of a

descriptive or

evident, but mainly

view starting to be

deficiencies in

literature. Over reliance

the assessment

narrow range of

narrative, with

supported by assertion

formed but mainly

expression and

may be very

material

little evidence of

and there may be a lack

derivative.

presentation; the

material provided by the

Fail

intermittent, and

analysis

of clarity and coherence

writer may achieve

tutor.

may be reduced to

clarity (if at all) only

its vaguest and

by using a

least challenging

simplistic or

terms

repetitious style

30 –

The work examined provides insufficient evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence provided

34%

shows that some of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in some of the indicators.

Fail

15-29%

The work examined is unacceptable and provides little evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence

shows that few of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in several of the indicators.

0-14%

The work examined is unacceptable and provides almost no evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The

evidence fails to show that any of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in the majority or all of the

indicators.

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