Calculate the return for each investments

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Corporate Finance Assignment

Answer - The Following Four Questions -

Question 1 - Calculate the return for each of these investments (capital gain/loss plus dividend).

a) My portfolio ends the year with a value of $12.72 million after paying dividends at the end of the year to the value of $255,000. The value of the fund at the beginning of the year was $12.13 million.

b) At the same time the All Ordinaries Index ended the year at 5695 after starting at 5226.

c) A share in BHP was selling for $23.45 at the beginning of the year and selling for $27.42 at the end of the year after paying a dividend of $1.13.

Question 2 - A perpetuity with the first annual cash flow paid at the beginning of year 4 is equivalent to receiving $100,000 in 15 years time. Assume that the perpetuity and the lump sum are of equivalent risk and that j2 = 11% pa is the appropriate interest rate. How much is the annual cash flow associated with the perpetuity? (Accurate to the nearest dollar)

Question 3 - Discus the implications of the empirical evidence on market efficiency for

(a) technical analysis

(b) fundamental analysis

Question 4 - The standard deviations of returns on assets A and B are 12 per cent and 6 per cent, respectively. A portfolio is constructed consisting of 30 per cent in Asset A and 70 per cent in Asset B. Calculate the portfolio standard deviation if the correlation of returns between the two assets is:

1. 1

2. 0.5

3. 0

4. -1

Comment on your answers.

Reference no: EM131672927

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len1672927

10/9/2017 5:52:56 AM

Australian student, need it as per the guidelines. The assignment is worth 40% of the total unit weight. Students are required to cover all stated requirements, penalty will apply for late submissions. Your answer ONLY uploaded to Moodle in PDF file. You need to show all the calculation steps and highlight the answers. (There will be STEP MARK) Please save the document as: FIN201 AT1_first name_Surename_Student Number Eg: FIN201AT1_John_Smith_20150000.

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