[BL] BSAT LSK & HM - Grade: A PDF

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Contents Part A............................................................................................................................................... Question 1......................................................................................................................................

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Contents Part A...............................................................................................................................................2 Question 1....................................................................................................................................2 Question 2....................................................................................................................................3 Question 3....................................................................................................................................4 Question 4....................................................................................................................................5 Question 5....................................................................................................................................6 Question 6....................................................................................................................................7 Question 7....................................................................................................................................9 Question 8....................................................................................................................................9 Question 9..................................................................................................................................10 Question 10................................................................................................................................10 Part B.............................................................................................................................................11

Part A. Question 1. Lisk (LSK) is created in 2016. It is a decentralized network that owns a separate Blockchain system. LSK implements a Delegated Proof of Stake (DPOS) algorithm that is very beneficial for holders, when instead of having to mine coins, just holding coins is able to receive coin rewards. Basically, the operating principle of LSK is similar to Ethereum. However, unlike other cryptocurrencies, LSK is not used for smart contracts but focuses on providing a platform for creating apps and functionalities. Specifically, organizations can apply the framework provided by LSK to develop blockchain through sidechains to develop games, financial applications, online stores and so on which simple, flexible and convenient way. Unlike other systems that mainly run on mainchain, applications using LSK's system mainly uses sidechains, thus avoiding test or fake transactions that can fill blocks and slow down. mainchain. Hence, LSK's sidechain measure allows the processing of large volumes of transactions without speed restriction. LSK is currently developing a combination of two Blockchain models: Single blockchain and Private blockchain to bring the highest security and stability to its platform. This is also the only platform that has Dapps (right part application), this allows companies, organizations and individuals to use LSK sidechains to create heavy and flexible use. Himax Technologies, Inc. (HIMX) is a Taiwan semiconductor manufacturing company, established in 2001 and specializes in integrated circuits. The company's main products include display controllers (for TVs, computers, monitors, smartphones, and tablets), touch panel control products, image sensors, optical products, as well as video and display technologies for global clients. Himax is listed on the NASDAQ Stock Exchange. They went public in 2006 and grew with the development of the industry, expanding to smartphones, tablets, and touch screens. Currently, the company is making 1 of the 10 largest semiconductor suppliers in the world.

Question 2. According to Wu & Mochizuki (2021), the world is facing the semiconductor shortage crisis due to problems such as lack of resources and especially COVID-19. Most companies predict that consumer demand will decline due to limited spending due to epidemics, however, the fact that contradicts the predictions of many companies makes semiconductors, especially large companies like Himax cannot produce enough to meet all their needs. The bottlenecks in these chains are all exhausted. The epidemic generated such a strong demand that Himax's partner was unable to produce enough display drivers for various electronic products, even though they increased production[ CITATION WuD21 \l 1033 ]. This demonstrates the importance of semiconductor manufacturing for the entire industry of the world. Especially when large semiconductor manufacturing companies like Himax are unable to fulfill all customer requirements, it will force the majority of the world's current electronics industry to limit production. Alves (2020) studied the application of proof-of-concept (POC) system provided by LSK framework in building online food ordering system. It found that using LSK allows increased processing speed by at least 20%, even during order peaks. In particular, the strength of LSK is to allow increased privacy of customers since all of their information is readable only when the customer provides a specific code. Therefore, we can see the feasibility of applying LSK's technology to online transaction systems of many different service industries (Alves, 2021, p. 012110).

Question 3.

Weekly closing price of LSK in 2020 ($) $2.50 $2.00

Closing price ($)

$1.50 $1.00 $0.50 $0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 / 2 2 / 2 2 / 2 4 / 2 5 / 2 5 / 2 6 / 2 7 / 2 7 / 2 8 / 2 9 / 2 9 / 2 9 / 2 0 / 2 1/ 2 1/ 2 2 / 2 3/ 2 1 1/ 1/ 2 2/ 1 3/ 3/ 2 4/ 1 5/ 5/ 2 6/ 1 7/ 7/ 2 8/ 1 9/ 9/ 3 0/ 2 1/ 1 12/ 2/ 2 1 1 1

The line graph shows the change of closing price of LSK in the period from 1/1/2020 to 30/12/2020. In it, it demonstrates the trend that this cryptocurrency has grown over the course of a year and continues to hold its price higher than its starting point. Specifically, LSK has increased by $ 0.58, equivalent to a 101% growth in 2020.

Weekly closing price of HIMX in 2020 ($) $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 1 3 1 9 2 5 7 0 2 5 7 9 2 8 9 1 6 4 1/ 1/ 2 2/ 1 3/ 3/ 2 4/ 1 5/ 5/ 2 6/ 1 7/ 7/ 2 8/ 1 9/ 9/ 3 0/ 2 1/ 1 12/ 2/ 2 1 1 1

Similar to LSK, in 2020, the price of HIMX is also on the rise, from $ 3.62 to $ 8.16, or 125.4%.

Question 4.

Based on the histogram, it proves that there is an abnormal distribution, including a lack of data at 51 - 67%. This makes the range of 67% - 83% outlier since it is far away from the rest of the data.

Similar to LSK, HIMX in 2020 also has abnormal distribution, in which the range -34% to -25% becomes outliers because the majority of the data is concentrated in the range from -15% to 24%, without the range of -25% to -15%.

Question 5. In this question, it chooses descriptive statistical method because this method includes the majority of necessary data in the other two methods, so the information about provided data will be more complete. For LSK:

Based on the statistical description, it found that for LSK data, the average value of return is 3%, where the highest value is 68.2% and the lowest value is -29% within 52 investment weeks. This demonstrates that there is left skewed, proving that the rate of return of the LSK is higher than the rate of loss with a standard deviation of 16%. For HIMX:

Based on the statistical description, it found that for HIMX data, the average value of return is 2.1%, where the highest value is 23.6% and the lowest value is -34.3% within 52 investment weeks. This proves that there is a right skew. In which, the standard deviation of all data is 10.5%. Question 6. For LSK: Loss return (A') Q1 Q2 Q3 Q4 Total For HIMX:

Profit return (A)

5 7 5 7 24

Loss return (A')

Total 7 6 9 6 28

Profit return (A)

12 13 14 13 52

Total

Q1 5 7 12 Q2 5 8 13 Q3 8 6 14 Q4 5 8 13 Total 23 29 52 In this section, it hypothesizes that if the probability of loss of LSK and HIMX in each quarter is similar then it shows that there is a dependence of the probability of loss at the time of investment.

For:

Probability of Loss (LSK) PoL(Q1) PoL(Q2) PoL(Q3) PoL(Q4) PoL(FY)

0.25 0.21 0.32 0.21 0.54

Probability of Loss (HIMX) PoL(Q1) PoL(Q2) PoL(Q3) PoL(Q4) PoL(FY)

0.24 0.28 0.21 0.28 0.56

Based on the difference in the change in the probability of loss quarter by quarter between the two investment options, it supports the hypothesis that there is an independent change in the probability of loss for each quarter. According to Lindström et al., (2020), Efficient Market Hypothesis, that effective financial markets exist when all information available and can affect the price of a security is reflected in the investment option. In the majority of studies, it proves that the US market, especially the assets listed on the NASDAQ are on strong forms. It means that the market is completely in control of the adjustment of the price of assets and that there are no rules that can interfere. Likewise, in this case the value of the investment will depend on the asset itself and not by time. Question 7.

For the confidence level of 95%, the CI of LSK is:

CI =−0.003 ±1.96

0.164 =−0.003 ± 0. 045 √ 52

For the confidence level of 95%, the CI of HIMX is: CI =−0.01± 1.96

0.105 =−0.003± 0. 029 √ 52

Confidence intervals measure the degree of uncertainty or certainty in the method of sampling. Confidence intervals can have any probability number, the most common being a 95% or 99% confidence interval. A confidence interval is a range of values that is likely to contain an undefined population parameter. Confidence level refers to the percentage of the probability or confidence interval that will contain the actual population parameter when a sample is drawn multiple times. Therefore, the most important thing when calculating CI is to make specific assumptions about the desired confidence level based on the researcher's assessment of the certainty of the data they have collected (Lindström, et al., 2020, p.152). Question 8. Based on the assumption that the investment will be invested longer, so it divides 2020 data into two timelines, consisting of 26 weeks (half year) and 52 weeks (full year) to test the price volatility of two investments. For: Price volatility=std × period Price volatility (LSK) Price volatility (26w) Price volatility (full year)

Price volatility (HIMX) 1.4965 1.2071

Price volatility (26w) Price volatility (full year)

0.781 4 0.746 4

An interval change is a change based on a change in time while characterizing volatility or risk in the fluctuation of the value of an asset, represented by the standard deviation of recoveries. Specifically, when observed weeks increase, it will decrease the interval width (change standard deviation), thereby reducing price volatility.

Question 9. According to Pishro-Nik (2014), there are three main factors that influence variation in the confidence interval: sample size, percentage and population size. Out of that, if the crisis occurs, the population size and the percentage of level of confidence will remain the same. Therefore, the crisis will change the CI primarily through a change of sample size, or specifically the return of value of HIMX and LSK. The financial market is a connected system. If the value of a bond changes significantly, this can affect the rates of currencies, stocks and cryptocurrencies. Depending on the type of economic crisis that may occur, the market will react differently (Pishro-Nik, 2014, p.321). When the economy falls, for example, it is possible that the value of cryptocurrencies increases while the price of stocks falls. The common explanation is that investors increasingly see virtual money as a kind of "virtual gold" - "storm shelter" from government intervention, geopolitical risks or oversupply due to the intervention of the bank. As a result, they will avoid typical economic crisis situations such as interest rate changes or monetary devaluation. The change in investor sentiment will cause the value of the investment to fluctuate, thereby changing the standard deviation of the investment, ultimately promoting the change of the CI. Question 10. In this study, it hypothesizes that the return of 2020 for HIMX is not the same as 2019, and the same goes for LSK. Hence, for HIMX, H0 = 1%. For LSK, H0 = 3%. For HIMX: z−value=

mean−1 % 0. 021−0.01 = =0.777 std error 0.015

It cannot reject the null hypothesis H0. The z score of 0.777 is within the nonrejection area. The 2 critical values (cutoff points) are -1.96 and 1.96. Since 0.777 is between -1.96 and 1.96, therefore, it cannot reject the null hypothesis. It rejects the alternative hypothesis because the z score is in range of the null hypothesis. For LSK: z−value=

mean−1 % 0.025− 0.03 = =−0.212 std error 0.02

The 2 critical values (cutoff points) are -1.96 and 1.96 with significant level of 95%. Since -0.21 is between -1.96 and 1.96, therefore, it cannot reject the null hypothesis. It rejects the alternative hypothesis because the z score is in range of the null hypothesis. Part B. Based on the profile analysis combined with the statistical technical evaluation of the price and return of HIMX and LSK in 2020, it concludes that the best option in this case depends on the investor's level of risk tolerance. Specifically, LSK is an option with a lower return rate but with a higher level of safety. In 2020, the probability of loss for LSK is 54% while that of HIMX is 56%. Specifically, LSK's highest decline in the year was 29% while that of HIMX was 34%. Therefore, it shows that LSK has lower loss margin, which in turn helps investors to lower their risk ratio. Specifically, by the end of 2020, the price of HIMX is also on the rise, from $ 3.62 to $ 8.16, equivalent to 125.4%. LSK only increased its price by $ 0.58, equivalent to a 101% growth in 2020. Its highest profit for the year is 68%, double the 23.6% from LSK. It proved that HIMX has a higher growth rate. In particular, HIMX's investment value is more stable than LSK due to its annual price volatility in 2020 is 0.75 versus 1.21 from LSK. In addition, the fluctuation of the value of investment based on CI of HIMX is 0.029, lower than 0.045 of LSK. Therefore, the value of this asset is less fluctuated by the market. Specifically, based on the world's demand, semiconductor products are the main products, affecting production activities of many other economic sectors. The semiconductor sector has heated up over the past year, thanks to increased demand for chips across many industries. The PHLX Semiconductor Index, which tracks leading stocks in the industry, is up 52% over the past 12 months, compared with the Nasdaq's 24% gain over the same period. In which, Himax is a semiconductor manufacturer with the largest capacity in the world. Its manufacturing activities involve a wide variety of industries, including automobiles, telephones, mobile devices and all industrial products that use semiconductors, in particular display driver systems. Hence, based on this need, it drives the business's revenue and investor confidence, which in turn drives an increase in stock prices.

Hence, it concluded that HIMX is a less risky long-term investment decision due to its low volatility ratio and a proven higher return rate in 2020. Whereas if an option with a lower loss rate is needed, the LSK is the solution. safer. However, since cryptocurrencies are not really legalized in many countries, it still poses a risk for long-term investment for this type of asset. References Alves, D., 2021. Proof-of-Concept (POC) of Restaurant’s food requests in the Lisk Blockchain/sidechain. Journal of Physics: Conference Series, 1828(1), pp. 012110. Lindström, E., Madsen, H. & Nielsen, J., 2020. Statistics for Finance. 1st ed. s.l.:Routledge. Pishro-Nik, H., 2014. Introduction to Probability, Statistics, and Random Processes. s.l.:Kappa Research, LLC. Wu, D. & Mochizuki, T., 2021. Why Shortages of a $1 Chip Sparked Crisis in Global Economy, viewed May 2021...