you have recently been employed as a trading manager in an Investment Research Firms to advise on the trading strategy for investing in Australian stocks. You as a trading professional responsible for overseeing and managing trading activities. Your primary role is to make strategic decisions to optimize trading performance and generate profits while managing risk.

Overall, your role is vital in the success of your trading desk or your investment team, which critically depends on how you draw findings and conclusions from the vast variety of financial data accessible to you so you can lead your team to achieve profitable trading outcomes.

Your first assignment is to perform a thorough analysis of the ASX market. Using your data processing skills, technical knowledge, training, and experience in computing perform the following tasks: a)First you get a feel whether the share prices in the ASX reflects firms value, i.e., is this a well functioning exchange market, where prices are unpredictable. For this, you perform a number of tasks, which are listed below:

1. Estimate the share price of the newly listed MAF210 firm on the ASX market. The firm is in its second year of listing.

The discount rate, weighted average cost of capital (WACC) that takes into account the riskiness of future cash flows, is 7.5% (Assume that it will not change in future).

Long-term free cash flow growth rate is 4%,

The firm reported cash $111 millions and the debt worth $4646 millions in its last year (2022) financial statements.

The share price and the number of shares outstanding at the end of year 2022 are $65 and 170 million respectively.

Forecasted end of year cash flows (in millions of $) for the next 5 years (20232027) are 390, 483, 930, 630 and 640. b) Using the 689599.7 normal rule of thumb, provide evidence that the distribution of the AORD returns is different from the normal.

c) What can you say about the efficiency of the ASX market? Base your discussion on the following task:

• Estimate and report the following models for the AORD returns:

Random Walk model with Drift (RWD)

Autoregressive model of order 1 (AR1)