Question: Question 5 ( a ) Using a cash contribution of $ 3 0 , 0 0 0 , you are examining three securities as potential

Question 5
(a) Using a cash contribution of $30,000, you are examining three securities as potential
single investments:
Origin Energy Limited: single stock LVR 70%;
Seven West Media Limited: single stock LVR 50%;
Cooper Energy Limited: single stock LVR 40%.
o Calculate the permitted borrowing amount;
o Calculate the maximum value of the portfolio value.
(b) Considering an investment in Origin Energy, and assuming a loan drawdown of $65,000,
analyse the financial/ portfolio management effect under the following market conditions
(assume a buffer of 10%):
No change in the portfolio value;
A 10% decline in the portfolio value;
A 20% decline in the portfolio value.

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