(a) Assume the yield to maturity on a 10-year Australian government bond is 2 percent and the market risk premium is 5 percent What is the expected rate of return on a share wth market average systematic risk? (Provide workings and explain beta value used.)

(b) Explain what happens to the risk of a portfolio as the number of assets in the portfolio is increased. 

(C) The share pnce forA Ltd at 1 July 2019 was $4.40 and at 31 June 2020 was $5.17. You have collected the following per share dMdend data for 2019 and 2020:

$0.03, paid 31 March 2019

$0 04, paid 31 September 2019

$005, paId 31 March 2020

$006, to be paid 31 September 2020

Determine the return on A Ltd shares for the year ending 30 December 2020? (7 marks)

Answer rating: 100% (QA)

SOLUTION a The expected rate of return on a share with market average systematic risk can be calcula... View the full answer