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Expert help when you need it- Q1:1. Select three different corporate bonds from three different companies. The bonds must have years to maturity at least 5 years apart from each other. One of the bonds should be issued by the company evaluated by your group in the first written assignment. a. A good bond data resource is: http://finra-markets.morningstar.com/ 2. Calculate the duration of each bond and the duration of a bond portfolio investing equally in the three bonds. 3. For reference purposes, select an additional two bonds issued by the companies from step 1 that match the longest maturity bond in your portfolio (i.e., you will analyze 5 bonds in total) a. Example: In step 1 you use a 2030 bond for Co. A, a 2040 bond for Co. B and a 2045 bond for Co. C. So, you choose a 2045 bond from Co. A and a 2045 bond from Co. B to be able to compare to the already selected 2045 bond from Co. C. b. Provide the key details for the additional bonds including spread to treasury. These two bonds are not included in your portfolio but will be useful in your overall analysis. 4. Your research indicates: a. Treasury bond rates will increase, and, b. The spread between corporate bonds and Treasury bonds will widen. 5. Forecast a change in yields for the three bonds in your portfolio. Discuss the properties of your three-bond portfolio with respect to returns and risk (interest rate risk and default risk). Including: What assumptions drive your change in treasury bond rates? What assumptions drive your change in spreads for each bond? How would you change the weights of the bonds in the portfolio (from equal) to take advantage of your research? How would you quantify the impact? What happens to the interest rate risk and default risk in your portfolio?See Answer
- Q2:15 The "father" of modern portfolio theory is: (a) Markowitz. (b) Friedman. (c) Samuelson. (d) Sharpe. 16. To describe the random variable of the portfolio rate or return, the investor needs (a) mean and coefficient of correlation. (c) only the expected value. (b) median and standard deviation. (d) expected value and standard deviation. 17. Portfolio Á has an expected return of 16% with a standard deviation of 8%. Portfolio B has an expected return of 12% with a standard deviation of 7%. (a) Portfolio A has a lower risk/return. (b) Portfolio B has a larger expected terminal wealth. (c) The portfolios have the same risk/return. (d) Portfolio B has a more certain return. 18 For an investor's indifference curve (a) each portfolio on the curve has the same standard deviation. (b) all portfolios on the curve are equally desirable. (c) he will choose the portfolio where his set of curves intersect. (d) he will prefer a portfolio that lies to the "southeast" of the curve. 19. The development of an investor's indifference curves is based on (b) correlation theory. (c) economic theory. (a) cognitive psychology. (e) probability theory. (d) utility theory. 20. Modern Portfolio Theory assumes (a) risk averse. (c) not concerned with risk. investors are (c) is risk neutral. (d) is risk-seeking. (b) risk seekers. (d) risk neutral. 21. Assuming investor non-satiation, an investor (a) will choose the portfolio with the lowest risk. (b) will choose the portfolio with the highest return for a given level of risk. See Answer
- Q3:• Assume you have AUD1, 000, 000. Create an equally weighted portfolio of your two stocks as at 31 October 2022. Show all calculations and workings. On 30 January 2023, you receive news that highlights instability in the global banking sector and believe there is significant downside risk which may impact your Australian banking stock(s). However, in this environment you believe there will be a flight to safe assets such as gold, and are therefore bullish on your gold stock(s). Devise a strategy that has the following objectives listed below and provide a detailed description of all your transactions and consider all costs. i. Protect the portfolio from adverse movements in the banking stock(s), by using an appropriate options strategy (where the option is held to maturity) from 30/01/2023 (start date) to 18/05/2023 (close out date); and ii. Protect the portfolio from a market downturn whilst maintaining the full exposure to the unsystematic risk in your gold stock(s) from 30/01/2023 (start date) to 18/05/2023 (close out date) (hint: consider the use of a futures contract). At the end of the period, close all the positions and evaluate the effectiveness of your strategy. Consider your total portfolio returns from inception (31 October 2022) without the hedging strategies versus the total portfolio returns with the hedging strategies and assess these returns against a relevant benchmark. Was it superior or ineffective? What are the potential sources of ineffectiveness in your strategy that may contribute to it performing better/worse than expected? Need to use EXCEL in this assignment, Data file is attached Assignment details | Need to use Excel, data file is attachedSee Answer
- Q4:Question 1. Answer all parts of the question. I. The following table shows a market where there are only three assets, and in the next time period, one of three possible outcomes will occur. State Probability E(r) City Lama Wool Excellent 0.3 16% 1.5% 25% James Alp Delta Good 0.5 (b) Calculate and interpret the returns correlation for each pair of assets. 13% 1.5% 18% (a) Calculate and interpret the expected return and standard deviation for each asset. (11 marks) (5 marks) E(r) 16.4% 9.25% 12% 12% II. The table presents the annual expected returns and standard deviations for three portfolios and for the market index: Asset Poor 0.2 6% 1.5% 4% Standard deviation 19.25% 11.30% 13.125% 13.75% Market index The risk-free rate of interest is 1%. This stock market is in equilibrium according to the capital asset pricing model (CAPM). (a) Calculate and interpret the beta value of each of these three portfolios. (5 marks) (b) Do these three portfolios lie on the Capital Market Line and what do you conclude from this? (7 marks) (c) Two new assets, Nick and Roll, are introduced to this market at prices which imply expected returns of 9% and 16%, respectively. The expected beta values are 0.9 and 1.25, respectively. Do Nick and Roll lie on the Security Market Line and what do you conclude from this? (8 Marks) III. Critically analyse the advantages and disadvantages of direct/individual investment in stock and bonds versus investment in Mutual funds. (14 marks) [Total 50 marks] Page 3 of 5/nQuestion 2. Answer all parts of the question. I. Consider the following three bonds: Bond N £1,000 8% Bond S £1,000 5% Bond T £1,000 Par Value Coupon Zero Time to Maturity 7 years Required Yield 5% (a) Calculate and interpret the present values of each bond. (b) Calculate and interpret the Macaulay Duration for each bond. 4 years 5% 5 years 5% (11 marks) (7 marks) (c) If required yield increases from 5% to 6%, discuss the action that a bond portfolio manager should take in this situation. (3 marks) II. You are considering a new project that costs £2000m and you have estimated the following cash flows: Year 1: £300m; Year 2: £400m; Year 3: £1400m. If the discount rate is 9%, do you recommend the project? (4 marks) III. Discuss, providing examples, the similarities and differences between Active versus Passive investment strategies, and then explain the roles or responsibilities of portfolio managers in an efficient market environment. (25 marks) [Total 50 marks] Question 3. Answer all parts of the question. I. Discuss, providing insights from relevant literature, the main characteristics of external credit rating agencies and the key roles of credit ratings in financial markets. (25 marks) II. Discuss, providing examples, the motivation for hedging, speculation and arbitrage in financial markets. (25 marks) [Total 50 marks] Page 4 of 5/nQuestion 3. Answer all parts of the question. L. Discuss, providing insights from relevant literature, the main characteristics of external credit rating agencies and the key roles of credit ratings in financial markets. (25 marks) II. Discuss, providing examples, the motivation for hedging, speculation and arbitrage in financial markets. (25 marks) [Total 50 marks] Page 4 of 5/nQuestion 4. Answer all parts of the question. L. Consider the following information about Kaplan and Morris for one-time period: Expected return Standard Deviation 16% 24% Stock Kaplan Morris 18% 26% You invest 40% of your fund in Kaplan and 60% in Morris. (a) Calculate and interpret the expected return of your portfolio. (3 marks) (b) Calculate the standard deviation of returns on your portfolio, and interpret your results, for the following two different scenarios: (10 marks) i. the correlation coefficient between the returns for Kaplan and Morris is +0.55'. ii. the correlation coefficient between the returns for Kaplan and Morris is *-0.80. II. Suppose you have a portfolio of Koll and Nell with a beta of 1.6 and 0.7, respectively. If you put 60% of your money in Koll, 35% in Nell and 5% in the risk-free asset, calculate and interpret the beta of your portfolio. (4 marks) III. An investor wishes to: (1) have a shareholding in only one company, Jax, with a beta of 1.25, and (ii) have a portfolio with a beta value of one. What is your advice as to how the investor can achieve these twin objectives? (4 marks) IV. The share price of Carl is currently £250 and the last dividend was £5. The analyst is predicting a dividend growth rate of 6% and the required rate of return is 8%. According to the Gordon Growth model, is Carl's stock fairly priced? (4 marks) V. Analyse, providing examples, the steps involved in the process of portfolio investment. (25 Marks) [Total 50 marks] Page 5 of 5See Answer
- Q5:Based on the case study we will answer the 5 questions in 1-2 slides for each questionSee Answer
- Q6:1. Describe the basic components of the current performance measurement system.See Answer
- Q7:3. What's the long-term goal for Purity Steel? Does the current performance measurement system align managers' incentives with that goal?See Answer
- Q8:4. Using the following two independent situations, calculate the ROI and ROI bonus for each branch both before and after the investment opportunity. Comment on any noted differences.See Answer
- Q9:5. Using only Example 1, calculate the residual income for both branches both before and after the new investment opportunity, using a capital charge of 5%. Comment on any noted differences.See Answer
- Q10:6. What are the measurement alternatives involved with using ROA as a performance measure? For example, in what ways can income be measured? In what ways can assets be measured?See Answer
- Q11:7. What action should Higgins take in response to the question raised by Larry Hoffman, the Denver Branch Manager?See Answer
- Q12:For each portfolio • explain the reasoning for your stock selection and weighting relative to the index • attach screenshots of your portfolios created in Workspace • report your results for each portfolio • provide comments on the total return/risk and active return/risk of your portfolios • discuss the sectors and securities' active weights in your portfolio • analyse the active return of your portfolios with reference to the allocation and selection effects What was the overall performance of the active portfolio, your passive portfolio and the benchmark index? describe any major market events that contributed to the return performance of the benchmark or of your portfolios • have you achieved (or not achieved) the goal for your passive/active portfolio Finally, which of the two portfolios will you recommend and why? RMIT Equity Investment and Portfolio Management UNIVERSITY Page 3 of 6See Answer
- Q13:FALL 2023 EFIN/MFIN 304 INVESTMENT MANAGEMENT Building a portfolio by using a combination of instruments with maximum returns and just the right amount of risk is key to successful investing. In this course, you have learned about types of financial markets and investments, short-term and long-term investment goals, and portfolio management. For this assignment, you select one topic from the list below and write a 2,000-2300 word analysis and investment strategy proposal. The paper must be double-spaced in APA format with Times New Roman size 12 font. TOPICS: Select one of the following topics for your assignment. Research the required topics and use what you have learned in the course to create your analysis and investment strategy proposal. 1. Sandra is a retired 70-year-old who has $750,000 after selling her small business and paying taxes on the sale. She wants to invest this money. Sandra would like the capital to rise faster than inflation to maintain the purchasing power of her wealth. However, she would also like to make low-risk investments and have easy access to at least $80,000 per year for the next three years. 2. Maria and Carlos are both 50 years old. They have two main financial goals: saving for retirement and saving for their eleven-year-old son's college education. Carlos recently inherited money from his mum, and after taxes, has $600,000. They would like to aggressively invest this inheritance and an additional $1,500 each month from their combined incomes in hopes of achieving maximum return. They want to retire 15 years from now, and their daughter will need to begin drawing money from the college fund in 7 years. 3. Simon is 35 years old. He just won the lottery and decided to take a lump sum payment. After paying taxes, he has $2.5 million left. Simon wants to immediately spend $450,000 and invest the rest. He doesn't want to aggressively risk his money, but he does want to maximize his return so that he can quit his job now and live the most lavish lifestyle that he can afford for the rest of his life. No matter which alternative you select, your analysis and investment strategy proposal should: 1. Explain in general how stocks, bonds, funds, futures, debts, and other investment instruments are traded in financial markets. 2. Analyze investment opportunities that align with the financial goals of the scenario. 3. Recommend specific investments to create a portfolio from the available capital. 4. Evaluate the risks of the recommended investments and the impact that diversification, taxes, inflation, and currency fluctuation could have on the proposed portfolio. 5. Calculate projected rates of return on each item in the proposed investment portfolio 6. Recommend strategies for long-term and short-term investment; include justifications for the recommendations you make./nUsing Sources You may refer to the course material for supporting evidence, but you must also use at least 5 sources and cite them using APA format. Please include a mix of both primary and secondary sources, with at least one source from a scholarly peer-reviewed journal. • Primary sources are first-hand accounts such as interviews, advertisements, speeches, company documents, statements, and press releases published by the company in question. • Secondary sources come from peer-reviewed scholarly journals, such as the Journal of Finance. You may use sources like JSTOR, Google Scholar, and OMICS International to find articles from these journals. Secondary sources may also come from reputable websites with.gov, .edu, or .org in the domain. (Wikipedia is not a reputable source,.) Content MFIN/EFIN 304 GROUP ASSIGNMENT MARKING GUIDE Structure of essay CRITERIA Formulating arguments Excel calculations Research & referencing Academic writing skills Total Presentation POINTS AVAILABLE 1 2 2 3 1 1 5 15 POINTS ACHIEVEDSee Answer
- Q14:9. Consider a bond selling at par ($100) with a coupon rate of 6% and 10 years to maturity. a. What is the price of this bond if the required yield is 15%? b. What is the price of this bond if the required yield increases from 15% to 16%, and by what percentage did the price of this bond change? c. What is the price of this bond if the required yield is 5%? d. What is the price of this bond if the required yield increases from 5% to 6%, and by what percentage did the price of this bond change? e. From your answers to question 9, parts b and d, what can you say about the relative price volatility of a bond in high-compared to low-interest-rate environments?See Answer
- Q15:11. Suppose that you are reviewing a price sheet for bonds and see the following prices (per $100 par value) reported. You observe what seem to be several errors. Without calculating the price of each bond, indicate which bonds seem to be reported incor- rectly and explain why. Bond U DYWXYN V Z Price 90 96 110 105 107 100 Coupon Rate (%) 6 9 8 0 7 6 Required Yield (%) 9 8 6 5 9 6See Answer
- Q16:✓ 17. Suppose the following information is quoted for a hypothetical Treasury security: Issite Bid Ask Change Yield 4% 3/21/2040-8 a. What is the bid price per $100 of par value? b. If an investor wanted to purchase $100,000 of par value of this Treasury security. what is the clean price? 110.25 24 c. What is the ask price per $100 of par value? d. If an investor wanted to purchase $100,000 of par value of this Treasury security. what is the clean price? e. What does the "Change" of -5 mean? f. What does the "Yield" column mean? g. Suppose that instead of a bid of 110.25 it is 110.25+. What would be the clean price per $100 of par value?See Answer
- Q17:18. Suppose a bond is purchased with a settlement date of October 15 and the next cou- pon payment is on December 1. The par amount purchased on the bond is $100,000, and its annual coupon rate is 4% paid semiannually. a. What is the accrued interest using the 30/360 day count convention? b. What is the accrued interest using the actual/actual day count convention?See Answer
- Q18:The Assessment This assessment will allow you to understand and demonstrate the different forms of implicit and explicit valuation methods and how to apply them with Excel. Your Excel work will need to be fully annotated to demonstrate your understanding of the valuation principles and industry-wide valuation principles. You will also need to carry out research into the UK economy and the London office market and provide an independent professional opinion on the opportunities and threats for the UK and London office investment based on the details set out below. This work should be set out as a professional report comprising 2,000 words with the Excel and annotations attached as an appendix. Your report should include a title page, a contents page, and an Executive Summary. These sections and appendices are excluded from the word count. Tables are also excluded from the word count. To give your report a professional look and enhance your work you are encouraged to use maps, graphs, tables photos, and other images that are relevant. Each week you will be sign-posted to where you should be with your research and writing up this assessment. This will provide you with guidance and help your time management to produce a piece of work to your best capabilities and on time. In addition to the brief below a video discussing this assessment can accessed by clicking on the link below./nAssessment detail. Please also read the following brief which this assessment is based on: - **** The Client's Brief Your company has recently been appointed by a Far Eastern-based investor to provide valuation advice and a commentary on the prospects of their investments in terms of capital value (ie depreciation, stabilising, or appreciating) over the next 10 years after which the client will sell. This advice is for the client's internal purposes only and will not be relied upon by a third party. This report therefore does not have to follow the RICS Red Book. You have been allocated the freehold office investment in Buckingham Place Road, London SW1W and the following tasks as part of this instruction. 1. You need to provide in writing a well-researched overview of the UK economy with information gathered from independent credible sources, such as the Financial Times (which can be accessed online from the Library) and the Office for National Statistics (ONS). Page | 2/n2. You are required to discuss the prospects of the UK economy over the short (1 year) to medium (2-5 years) term based on your research and the potential impact on commercial property investment. (Note: -1. and 2. above will improve your research-based skills and understanding of macroeconomics. Maximum 500 words). 3. Provide a detailed overview of the London office investment market based on research from companies operating in that market, such as Savills, Deloitte, and Knight Frank, as well as RICS, (isurv) EGI and CoStar (which can be accessed online from the library). 4. Detail the future opportunities and threats to the London West End office investment market based on your research. (Note: - 3. and 4. above will improve your research-based skills and understanding of micro-economics. Maximum 500 words). 5. Research current rental values and investment yields which will be set out in a table and based on this comparable evidence provide clear justification for your opinion on the Buckingham Place Road office's market rent (ERV) and all-risk yield (ARY). Sources of information can be obtained from research reports from the main London agents as well as RICS, EGI and Co-Star. (Note: - this will reinforce your skills of gathering and analysing relevant comparable evidence to arrive at an appropriate opinion of value. Setting out your justification will provide transparency for your client and leave a paper trail in case of a query later. Maximum 500 words). 6. Produce market values in Excel on the Buckingham Palace Road office investment on the following bases: - a. Rack rented. b. Term and reversion. c. Hardcore/layer method. d. Short-cut DCF. e. Full DCF with a growth rate provided. f. Full DCF with Gordons Growth Model. Your workings should be fully annotated and be set out in Excel attached as an Appendix. You will need to include your calculations and separate sheets showing your formula. All calculations will come from the formula that you have inputted./n7. Include a table in the main body of the report setting out the market values calculated on the above bases (from point 6) with a recommendation on the appropriate valuation method to be adopted for this investment. (Note: -6. and 7. above will reinforce your knowledge of the different types of implicit and explicit valuations and provide you with greater confidence to perform these calculations. Maximum 300 words). 8. Provide a conclusion and recommendation to a proposed 10-year investment hold period. (Note- this will provide you with the skill of drawing together all of your research and knowledge set out in your report to leave the client with a clear summary and recommendations expected of a professional. Maximum 200 words). Here are the details of the investment property you will be reporting on A six-storey freehold office investment in Buckingham Palace Road, London SW1W. * Built in the 1980s but comprehensively refurbished to a Grade A specification three years ago. + EPC rating Grade A. * IPMS2 60,000 sq.ft with an 85% efficiency to IPMS3. + Passing rent £47.00 per sq.ft set 3 years ago. * Let to a triple-A covenant for a 25-year term with 5 yearly upwards only rent reviews three years ago. > FRI lease terms and there are no landlord, tenant, or mutual break options. > Purchaser's costs are 6.75%. * Sales costs are 2.4% for agent and legal fees. ******************************************** ******************************* Coursework 1 will assess the following learning outcomes of this module: - 1. Apply valuation principles and concepts to undertake a wide range of commercial property valuations for specific purposes in specific settings, whilst having regard to relevant and appropriate professional guidance, which will be introduced. 2. Identify and appreciate which valuation method may be more applicable in a particular setting. 4. Analyse, synthesise, and evaluate more complex rental evidence and apply the same to the valuation process./n5. Use appropriate communication to a professional standard of practice to confidently, clearly, and competently on property matters. 6. Competently research for information associated with the property market, in a specific UK and European setting. 7. Communicate effectively and professionally in all expected formats to influence change, enhancing the prospects of assumed client appreciation and recognition. This will include the ability to reflect on the content of what has been delivered in this process, in the context of the individual's personal knowledge and therefore opportunities of enhancement through personal development. In addition to the modules' recommended textbooks, links to assist further research are below. Additional reading will be added each week onto the module page and clearly identified in class.See Answer
- Q19:Required Black-Scholes Project First, choose a stock whose ticker starts with the same letter that your last name starts with. For example, since my last name is Brigida I may choose Boeing (ticker BA). Once you have chosen your stock create a spreadsheet which will: 1. Value an option on the stock using the Black-Scholes (1973) option pricing model. 2. Calculate the stock's historical annualized volatility, and get an estimate of the implied volatility. To do so the you must show it is able to download a recent time series of the underlying stock price, convert these prices into a time series of returns, calculate the standard deviation of the returns, and then annualize the standard deviation (this is the stock annualized volatility which is a parameter in the option pricing model). 3. Calculate the value of the option by Monte Carlo. 4. Calculate the Greeks. You should be ready to explain any part of the spreadsheet./nTo Do Instructions student note: The ticker would be : L and it stands for Estée Lauder stock to refer- Lowe's which is ticker LSee Answer
- Q20:Choose one of the following topics to present to your peers in a professional analysis using a minimum of 350 words. Topic • Research and provide an analysis related to the use of mutual funds in an investment portfolio versus the use of individual stocks or bonds. Identify distinct advantages and potential disadvantages when selecting mutual funds. • The efficient market hypothesis (EMH) states that competition among investors using available market information causes securities to be fairly priced. Provide a critical analysis of EMH and the implication for individual investors. • As individual investors, why is diversification an important consideration in a large portfolio and how does this apply to your own investment decisions related to securities you may choose as investments? Your critical response should have a minimum of two sources published in the last 12 months which should be used to support the content within the postings, proper in-text citations. Your responses should be professionally written and correctly formatted referencesSee Answer
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