M DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO SECTION B. ANSWER...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
M DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO SECTION B. ANSWER ANY THREE (3) QUESTIONS Question 1 (25 marks) You have analyzed Solar Power Ltd. and have reported the results of your analysis to your manager. The outlook for the coming year for the firm are set out in the table below. Probability 0.1 0.2 0.2 0.3 0.1 0.1 .1 .2 .4 .2 Using the supplied information for Solar Power Ltd. a) Calculate its expected return b) Calculate its variance c) Calculate its standard deviation d) Calculate the standard error of returns. e) Calculate its coefficient of variation -2 4 21 Question 2 (25 marks) Using the data given below: (a) Calculate the expected returns of Frontier and Point (4 marks) (b) Calculate the composition of the minimum variance portfolio comprised of Frontier and Point. (10 marks) (8 marks) (3 marks) (c) Calculate the variance of the minimum variance portfolio (d) Calculate the expected return of the minimum variance portfolio Probability Frontier (%) Point (5) 3 6 8 G Correlation Coefficient, Pab= .29 Return (%) -24 -13 9 5 4 13 18 21 6 3 7 .34 (a) What is the present value of option 1? (b) What is the present value of option 2? (c) What is the present value of option 3? (5 marks) (10 marks) (3 marks) (4 marks) (3 marks) 1 Question 3 (25 marks) One of your clients has come to you for guidance on a financial matter. He is selling his business and needs help in understanding the purchase options being offered by a prospective purchaser. The options are (i) $10 million dollars payable immediately. (ii) Five equal annual payments of $2.5 million each with the first payment made immediately. (iii) Five unequal annual payments with a first payment of $2 million immediately, and each succeeding payment being 8% larger than the previous one. He wants you to help him determine which offer was worth the most. Assume interest rates average 10% per annum for the five year period. (5 marks) (10 marks) (10 marks) Using the supplied information for Solar Power Ltd. a) Calculate its expected return b) Calculate its variance c) Calculate its standard deviation d) Calculate the standard error of returns e) Calculate its coefficient of variation 0.3 0.1 0.1 Question 2 (25 marks) Using the data given below: (a) Calculate the expected returns of Frontier and Point (4 marks) (b) Calculate the composition of the minimum variance portfolio comprised of Frontier and Point. (10 marks) (8 marks) (3 marks) (c) Calculate the variance of the minimum variance portfolio (d) Calculate the expected return of the minimum variance portfolio Probability Frontier (% Point (6) .1 5 4 .4 3 6 8 -2 4 21 G Correlation Coefficient, Pab.29 (1) (ii) (iii) (iv) 6 Question 4 (25 marks) Write short notes on the following: 3 13 18 21 7 34 (a) What is the present value of option 1? (b) What is the present value of option 2? (c) What is the present value of option 3? Question 3 (25 marks) One of your clients has come to you for guidance on a financial matter. He is selling his business and needs help in understanding the purchase options being offered by a prospective purchaser. The options are (i) $10 million dollars payable immediately. (ii) Five equal annual payments of $2.5 million each with the first payment made immediately. (iii) Five unequal annual payments with a first payment of $2 million immediately, and each succeeding payment being 8% larger than the previous one. He wants you to help him determine which offer was worth the most. Assume interest rates average 10% per annum for the five year period. Weak Form of the Efficient Market Hypothesis The Strong Form of the Efficient Market Hypothesis The Random Walk Theory The Small Firm Effect The Functions of the capital market (vi) Informational Efficiency 6 (5 marks) (10 marks) (3 marks) (4 marks) (3 marks) END OF PAPER (5 marks) (10 marks) (10 marks) (4 marks) (3 marks) (4 marks) (4 marks) (6 marks) (4 marks) M DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO SECTION B. ANSWER ANY THREE (3) QUESTIONS Question 1 (25 marks) You have analyzed Solar Power Ltd. and have reported the results of your analysis to your manager. The outlook for the coming year for the firm are set out in the table below. Probability 0.1 0.2 0.2 0.3 0.1 0.1 .1 .2 .4 .2 Using the supplied information for Solar Power Ltd. a) Calculate its expected return b) Calculate its variance c) Calculate its standard deviation d) Calculate the standard error of returns. e) Calculate its coefficient of variation -2 4 21 Question 2 (25 marks) Using the data given below: (a) Calculate the expected returns of Frontier and Point (4 marks) (b) Calculate the composition of the minimum variance portfolio comprised of Frontier and Point. (10 marks) (8 marks) (3 marks) (c) Calculate the variance of the minimum variance portfolio (d) Calculate the expected return of the minimum variance portfolio Probability Frontier (%) Point (5) 3 6 8 G Correlation Coefficient, Pab= .29 Return (%) -24 -13 9 5 4 13 18 21 6 3 7 .34 (a) What is the present value of option 1? (b) What is the present value of option 2? (c) What is the present value of option 3? (5 marks) (10 marks) (3 marks) (4 marks) (3 marks) 1 Question 3 (25 marks) One of your clients has come to you for guidance on a financial matter. He is selling his business and needs help in understanding the purchase options being offered by a prospective purchaser. The options are (i) $10 million dollars payable immediately. (ii) Five equal annual payments of $2.5 million each with the first payment made immediately. (iii) Five unequal annual payments with a first payment of $2 million immediately, and each succeeding payment being 8% larger than the previous one. He wants you to help him determine which offer was worth the most. Assume interest rates average 10% per annum for the five year period. (5 marks) (10 marks) (10 marks) Using the supplied information for Solar Power Ltd. a) Calculate its expected return b) Calculate its variance c) Calculate its standard deviation d) Calculate the standard error of returns e) Calculate its coefficient of variation 0.3 0.1 0.1 Question 2 (25 marks) Using the data given below: (a) Calculate the expected returns of Frontier and Point (4 marks) (b) Calculate the composition of the minimum variance portfolio comprised of Frontier and Point. (10 marks) (8 marks) (3 marks) (c) Calculate the variance of the minimum variance portfolio (d) Calculate the expected return of the minimum variance portfolio Probability Frontier (% Point (6) .1 5 4 .4 3 6 8 -2 4 21 G Correlation Coefficient, Pab.29 (1) (ii) (iii) (iv) 6 Question 4 (25 marks) Write short notes on the following: 3 13 18 21 7 34 (a) What is the present value of option 1? (b) What is the present value of option 2? (c) What is the present value of option 3? Question 3 (25 marks) One of your clients has come to you for guidance on a financial matter. He is selling his business and needs help in understanding the purchase options being offered by a prospective purchaser. The options are (i) $10 million dollars payable immediately. (ii) Five equal annual payments of $2.5 million each with the first payment made immediately. (iii) Five unequal annual payments with a first payment of $2 million immediately, and each succeeding payment being 8% larger than the previous one. He wants you to help him determine which offer was worth the most. Assume interest rates average 10% per annum for the five year period. Weak Form of the Efficient Market Hypothesis The Strong Form of the Efficient Market Hypothesis The Random Walk Theory The Small Firm Effect The Functions of the capital market (vi) Informational Efficiency 6 (5 marks) (10 marks) (3 marks) (4 marks) (3 marks) END OF PAPER (5 marks) (10 marks) (10 marks) (4 marks) (3 marks) (4 marks) (4 marks) (6 marks) (4 marks)
Expert Answer:
Related Book For
Posted Date:
Students also viewed these finance questions
-
Let A, B be sets. Define: (a) the Cartesian product (A B) (b) the set of relations R between A and B (c) the identity relation A on the set A [3 marks] Suppose S, T are relations between A and B, and...
-
Racing Investment Fund 2000 LLC was created in August 2000 to purchase, train, and race thoroughbred horses. The LLC ' s operating agreement provided for 50 membership units to be sold for an initial...
-
How would illegal immigration be affected if all countries had property ownership rights as well defined as in the United States? Consider the following statement by Charles Wheelan, author of the...
-
Billy Board Company specializes in the maintenance and repair of signs, such as billboards. On March 31, 2010, the accountant for Billy Board Company prepared the following trial balances:...
-
During the month of October, credit sales for a business actually amounted to \($754\) 534. However, an error of \($20\) 000 had been made in totalling the sales column of the sales journal. When and...
-
The following T-accounts record the operations of Roddick Co.: Required a. Calculate the amount of direct materials purchased during the period. b. Calculate the direct materials used in production...
-
* Installing integrated software needs more memory than installing many .standalone applications True O False
-
Go to the Webinars worksheet. DeShawn wants to determine the number of webinars the company can hold on Tuesdays and Thursdays to make the highest weekly profit without interfering with...
-
The American Society for Microbiology (ASM) and the Soap and Detergent Association (SDA) jointly commissioned two separate studies, both of which were conducted by Harris Interactive. In one of the...
-
Short Answer 15. (20 Points) Compare and contrast floating point number vs integers in range and representing real numbers using 32 bit signed values. 16. (20 Points) Subtract 12 from 5 (5-12) using...
-
Calculate how many hours could a hypothetical 1 2 0 , 0 0 0 kg , 2 . 5 m radius cylindrical flywheel rotating at 3 6 0 rad / s supply energy at the rate of 1 . 5 MW?
-
On the Income Statement for a manufacturing firm, operating expenses would include a line item for "Direct Labor Expense". True False
-
1- Which numbers given below are the first digits of income statement accounts? B) 5,6 A) 3,4 C) 4,5 D)6,7
-
estion 7 yet wered -ked out of 0 Flag question In a multiuser database, what type of operations can users perform simultaneously? O a. Querying only O b. Exclusive control Time left 0:35:49 O c....
-
The pie chart to the right shows how adults rate their financial shape. Suppose 4 people are chosen at random from a group of 1100. what is the probability that all four would rate their financial...
-
Question 6.10 Current and deferred tax worksheets and tax entries From the hip Ltd?s statement of profit or loss for the year ended 30 June 2007 and extracts from its statements of financial position...
-
In connection with your examination of the financial statements of Martinson Inc. for the year ended December 31, your post-balance sheet date audit procedures disclosed the following items: 1....
-
Describe the main non-statistical sampling methods. What are the advantages of non-statistical sampling?
-
Fred Saros is auditing cash payments for OGA, a large supermarket. OGA deals with several very large corporate suppliers who expect payment by electronic funds transfer within three business days of...
-
Finesse Fitness was established on 1 April 2024 with an initial investment of $60000 by the owner, Daniel Hewitt. During the first few months of business, the owner employed a student studying...
-
Jason Vu offers tutoring services to first-year university students. He has set up a sole proprietorship business named JV Tutoring. Jason has collected the following information relating to his...
-
Yamindi was raised on a farm in the Northern Territory and loves animals. When he finished secondary school, Yamindi had nearly \($5000\) in a savings account. He used his savings to start a business...
Study smarter with the SolutionInn App