Roosters Ltd has a company superannuation scheme, Roosters Superannuation, which its employees can choose to nominate for their compulsory superannuation contributions. The majority of employees are in the age group 25 years to 35 years. Roosters Superannuation is planning to increase the percentage of equity in their portfolio.

2. In your own words,explainthe impact that COVID has had on the preferred investment mixandattitude to risk of the age group 25 years to 35 years. (worth 2 marks)
4. In your own words,explainwhy Rooster Superannuation will have the same optimal portfolio of risky shares as all other investors but that their optimal total portfolio, containing this optimal portfolio of risky shares and a risk-free asset can be different. (worth 2 marks)
6. Describehow the strategy of short-selling will influence the number of portfolios that Roosters Superannuation has to choose between. In your answer you must explain what is involved in the short sale of shares.(worth 1 mark)

2. Beta plays an essential role in many asset pricing models, such as the capital asset model (CAPM), single index model (SIM) and arbitrage pricing models (APT).

2. describehow a plot of monthly returns on Roosters Ltd against the monthly market returns from 1990 to 2020 can be used to estimate beta. (worth 2 marks)
4. Explainin your own words how news that the beta of Roosters Ltd has been overvalued will influence the share price of Roosters Ltd. (worth 1 mark)
6. Describe what betas show in the single index model (SIM) and arbitrage pricing theory (APT). In your answer you will need to include a description of the SIM and APT. (worth 2 marks)

3. Your friend has just started trading on the Australian Securities Exchange (ASX). They ask you questions on margin trading and share selections.

2. The current ordinary share price of Roosters Ltd is $50 and your friend would like to invest in $20,000 worth of Roosters Ltd's ordinary shares but only has $12,000.Explain in your own words how your friend can use margin trading to make this investment and at what share price they will experience a margin call. The maintenance margin is 20%. (worth 2 marks)
4. Explainhow your friend can use correlation when making decisions on what shares to add to their portfolio of shares. (worth 1 mark)
6. Describe in your own words how your friend can use the security market line to decide whether or not they should short-sell shares in Roosters Ltd. (worth 2 marks)

Answer rating: 100% (QA)

Impact of COVID on Investment Mix and Risk Attitude The COVID19 pandemic has significantly impacted the preferred investment mix and risk attitude of individuals in the 25 to 35 age group With the eco... View the full answer