Assignment 1 – Questions

There are five (5) questions in this Assignment.

Marks allotted to every section of the question square measure shown aboard each question variety.

Answer every part of every question on the test paper, within the area provided. Show all workings for each question. 2 sheets further|for extra|for added} workings square measure connected to the present assignment – if a lot of square measure needed please print additional worksheets.

(1 + 1 + 1 + 1 = 4 Marks)

One year agone, you acquire shares in every of three corporations, D Ltd, E Ltd, and F Ltd. the number of shares bought and also the damage of every share is shown in columns (2) and (3) of the table below and contains your investment portfolio. Today, the worth of every share is as shown in column (4) of the table.

Name of Company Number of Shares Purchase Price Share Price after One Year

(2) (3) (4)

D Ltd 2,000 $25.00 $26.00

E Ltd 3,000 $10.00 $11.00

F Ltd 5,000 $8.00 $10.00

a) Calculate the equally weighted portfolio come back for the year. [Express your answer as a proportion come back, correct to a pair of decimal places.]

b) Calculate the price-weighted portfolio come back for the year. [Express your answer as a proportion come back, correct to a pair of decimal places.]

c) Calculate the value-weighted portfolio come back for the year. [Express your answer as a proportion come back, correct to a pair of decimal places.]

Your father has recently retired and has received a superannuation payout of $1,000,000. He and his adult female (your mother-in-law) reside in a very beach residential district of state capital in their own residence value $1,500,000. they need no debts, having paid off the mortgage last year, and that they have saved $100,000. Neither wants to figure once more. They grasp you're finding out Investments at KOI, and have approached you. What investment recommendation would you provide them?

[1 + 1 + 1 + 1 + 1 = 5 Marks]

Absolute, an associate rising economy has simply created a difficulty of coupon-paying bonds, every with three years to maturity, and a face price of $1,000,000. every bond features a coupon rate of four-dimensional once a year, collectible half-yearly.

The bonds have a yield of j2 = 6 June 1944, that's half-dozen % once a year, combined half-yearly.

a) Calculate this value of every $1,000,000 bond, correct to the nearer cent.

b) Calculate the period of every bond. (Show four places of decimals).

c) Calculate the convexity of every bond. (Show four places of decimals).

You have simply detected that forthwith when the issue, the yield on the bond has exaggerated from 6 June 1944 once a year, combined half-yearly, to 6.2% once a year, additionally combined half-yearly.

Using the formula (and/or the method) applied in (a) higher than, calculate the new bond value and also the resultant value amendment, assumptive that there square measure still three years till the bond’s maturity.

Before the rise in yield partially (d) higher than passed off, calculate the worth of the bond at the period date, as calculated in (b) higher than.