Full Time Diploma in Commerce
Intake FB68/GS64(M)
金融与银行原理代考 This examination paper consists of THREE (3) pages (including this cover page). Check that you have all the pages.
Principles of Finance and Banking
Main Examination
Date of Examination : 14 April 2023
Exam Duration : THREE (3) hours
Time : 9.00am – 12.00pm
Weightage : 80%
Total Score : 80 marks
Instructions:
1.This is a remote closed book examination. Any student found to have plagiarised (e.g. copying directly from the source without marking attempts to write in your own words) with their answers, will be deemed to have committed an academic offence leading to penalties. Unauthorised material is strictly prohibited.
2.Basic, Scientific & Financial Calculators are allowed. Programmable Calculators are NOT allowed. 金融与银行原理代考
3. This paper consists of FOUR (4) questions: Each question carries 20 marks
- Answer ALL the questions in the answer booklet provided.
4.This examination paper consists of THREE (3) pages (including this cover page). Check that you have all the pages. 金融与银行原理代考
5.Use Blue or Black pen only to write your answers and soft pencil for any multiple choice answers, diagrams, images, graphs etc. All other colours are prohibited.
6.All answers to be written in answer booklet provided. Clearly strike through any work you do not wish to be marked.
No part of this document, whether image, text or otherwise, may be copied, reproduced, published, adapted, modified, distributed, transmitted, communicated and/or stored in any form.
Question 1 (20 Marks) 金融与银行原理代考
a)
i.A 7% $1000 bond matures in 15 years and is selling at par. Find the yield to maturity (YTM) of the bond.(3 marks)
ii.If the bond was selling at $1100, should the YTM of the bond be more than or less than 7%?(3 marks)
b) BigBang Company bonds have a 14% coupon rate. Interest is paid semiannually. The bonds have a par value of $1,000 and will mature 10 years from now.
i.What is the coupon payment received by the investor on a semiannual basis? (3 marks)
ii.How much is the investor willing to pay for the bond?(8 marks)
iii.Is this a premium or a discount bond and why?(3 marks)
Question 2 (20 marks)
a) Compare and contrast primary market and secondary market transactions as it relates to the flow of funds in the transactions.
(Students are required to answer this part in 50-100 words)(6 marks)
b) PQR, Inc. just paid a dividend of $2. PQR expects dividends to grow at 10%. The return on stocks like PQR, Inc. is typically around 12%.
i.What is the most you would pay for a share of PQR stock?(4 marks)
ii.What do you expect the price of the share to be in 5 years’ time?(4 marks)
c) An investor buys a stock for $25 per share. and sells it 9 months later for $27.50. What is the (9-month) holding period yield?(6 marks)Page 3 of 3
Question 3 (20 marks) 金融与银行原理代考
You are considering the three securities listed below.
a) Calculate the expected return (mean) for each security.(3 marks)
b) Calculate the standard deviation of returns (risk) for each security.(9 marks)
c) As an investor, compare Stock X with Stock Y, and identify which stock will you select and why.(3 marks)
d) What is the expected return on your portfolio if you have 40% in Stock X and 60% in Stock Z?(5 marks)
Question 4 (20 marks) 金融与银行原理代考
a) You want to triple your money in 10 years. What interest rate must you earn if the interest is compounded annually?(5 marks)
b) Rickey plans to retire in 35 years. He can afford to save of $800 a month into an account that pays an interest of 6% compounded monthly. How much money will he be able to save for his retirement?(5 marks)
c) You are planning to borrow today. You have two options:
i) First Bank offers a rate of 7.16 percent compounded monthly. 金融与银行原理代考
ii) Second Bank offers 7.35 percent compounded quarterly.
Which bank will you choose and why?
(5 marks)
d) If you were to deposit $12,000 in retirement account that would earn interest of 7.5%, compounded annually for 20 years, how much would you have accumulated by the time you retire?(5 marks)
