Your final mark is split 50/50 into the mark you attain in the final exam as well as a mark based on your ranking from all the school assessments you have throughout year 12. So yes, if you bombed out in the HSC it would affect you.
As for the second part of your question, you will get the best mark from your school if you are rank 1, but thats only 50% of your total score, the other is from your performance during the final hsc exam.
I'm sure others will be able to explain it better, I always end up getting it wrong somewhere =)



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