Q2) Suppose Alex wants to buy a Range Rover in 5 years' time and estimate that he will need $50000. In a savings account the interest rate that you can earn is 5%, and Alex can put in today $5000, $5000 in one year's time and $5000 in 2 years' time in the savings account. How much will he have to come up with at the end of the third year in order to buy his Range Rover? 

Q3) Precious metals investment has the following expected cash flows:

Year Cash Flows

1 15,000

2 20,000

3 45,000

4 40,000

The discount rate is 6 percent. What will be the investment's present value?

Q5) What is the PV annuity factor for 12 years at a 4% interest rate?

Q6) Presuming that Sarah has purchased a house in Sydney for $2000000 and she was able to arrange $200000 in deposit and successfully secured a 40 year home loan at 5% for the remaining balance. What are Sarah's monthly payments?

Use for the following information for Question 7 to Question 15

You have been given the following information regarding 3 securities, the market index and a short-term government security.

	Expected Return	Variance-Covariance Matrix
		K	A	T	RM	RF
Kronos Worldwide (K)	0.11	0.0121
Arrow Energy (A)	0.12	0.0064	0.0144
Telstra (T)	0.15	0.0137	0.0080	0.0169
All Ordinaries (RM)	0.13	0.0121	0.0065	0.0097	0.0081
90-dayTreasury Notes (RF)	0.08	0	0	0	0	0

Q7)What is the expected return on a portfolio consisting of 10% ofKronos Worldwide, 10% ofArrow Energy and 80% ofTelstra.

Q8)What is the risk on a portfolio consisting of 25% ofKronos Worldwide, 50% ofArrow Energy and 25% of Telstra

Q9)What is the beta ofKronos Worldwide?

Q10)What is the beta of Arrow Energy?

Q11)What is the beta of Telstra?

Q12)What is the beta of 90-day Treasury notes?

Q13)What is the expected return onKronos Worldwide according to the Capital Asset Pricing Model?

Q14)What is the expected return onArrow Energy according to the Capital Asset Pricing Model?

Q15)What is the expected return onTelstra according to the Capital Asset Pricing Model?

Q16)One year ago, you bought a share from Kronos Worldwide Ltd for $100.00. it's worth $140.00 Today. Over the year, the company paid a dividend of $6 per share. What is the total return did you earn on this share over the past year?

Q17)You are trying to choose between two investments. The first one is a painting by Picasso, has an expected return of 14% with a standard deviation of return of 30%. The second investment is a pair of blue suede shoes once worn by Elvis, has an expected return of 25% with a standard deviation of return of 27%.

a)Calculate each investment's coefficient of variation.

b) if the risk free rate of interest is 3% then what is the way to determine which investment is a better investment? explain and please show the workings

Q18)Brandon is considering investing in a share of NYSE Ltd and he knows that the share returns tend to be normally distributed, and he has calculated the expected return on the share to be 15% and the standard deviation to be around 19%. Based on those given statistics, within what range would Brandon expect the return on this share to fall during next year (calculate the range at 99% level of confidence).

Answer rating: 100% (QA)

Q2 To solve this problem we need to calculate the future value of the savings account and compare it ... View the full answer