Week 4 Tutorial Questions-1
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FIN30020 Alternative Investments
Swinburne University of Technology FIN30020 Alternative Investments Tutorial Questions Topic 4
1.
Describe different types of commodities. 2.
Identify three primary reasons for investing in commodities. 3.
Answer the following MCQs: 3.1.
Industrial activity most likely affects the demand for which of the following commodities?
A.
Copper
B.
Natural gas
C.
Softs (e.g., cotton, coffee, sugar and cocoa)
3.2.
Which of the following commodity sectors are least affected in the short term by weather-related risks?
A.
Energy
B.
Livestock
C.
Precious metals
4.
Describe how event risk can affect the traded prices of commodities in a global market?
5.
Explain the three ways to gain exposure to commodity assets and discuss the advantages and disadvantages of each for an investor who is looking to achieve commodity exposure.
6.
Most individual investors cannot purchase commodities due to the high cost of carry. Discuss some
alternative investment strategies that can give an investor exposure to the commodities asset class
without the requirements for physical storage.
7.
What are the market participants in the Commodity market? 8.
How can a user of agricultural commodities take advantage of the futures market to hedge their
exposure to a rise in price of a commodity? What would they do in the expectation of a fall in
commodity price?
9.
Consider a country in which two airlines operate. One hedges its exposure to the oil price and the other chooses not to hedge. Describe the likely effects on the two companies' share prices if:
a conflict in the Middle East caused disruption to oil exports from OPEC countries;
a major discovery of shale oil was made in the United States and production began immediately.
10.
An important distinction between spot and futures prices for commodities is that:
A.
spot prices are universal across regions, but futures prices vary by location.
B.
futures prices do not reflect differences in quality or composition for a commodity.
C.
spot prices vary across region based on quality/composition and local supply and demand
factors.
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Related Questions
Hello
i just saw the company policy, this question is the second time i am asking but i would like to get help with question 6
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Q3a
Please assist to answer Q3a in detail write up
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Current Attempt in Progress
Describe how investing in more than one asset can reduce risk through diversification.
B
I U T₂ T² T
=
=
||
E
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QUESTION 11
1. Which market variable is determined within the capital markets?
c a. Property value
C b. Market rent
c. None of the answer choices
d. Net operating income
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Answer only 2 question
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Investment Expected Return Standard Deviation1 0.12 0.302 0.15 0.503 0.21 0.164 0.24 0.21Based on the utility formula we covered in lectures,a. Calculate the utility of each investment alternative for an investor with risk averse A=4:The utility of Investment 1The utility of Investment 2The utility of Investment 3The utility of Investment 4b. State which investment you would select if you were risk averse with A=4: Blank 5. Fill in the blank, read surrounding text.
c. State which investment you would select if you were risk averse with A=2: Blank 6. Fill in the blank, read surrounding text..
d. State which investment you would select if you were risk neutral: Blank 7. Fill in the blank, read surrounding text.
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D3
Finance
(d) The moving VWAP (MVWAP) is an indicator for long-term investment. Compare the moving VWAP and Moving Average in terms of their similarity and dissimilarity.
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QUESTION 5
1. Investor A is seeking to invest in commercial real estate (CRE). While Investor A employs talented individuals they
lack the depth necessary to invest directly in the asset class. Investor A has a moderate risk tolerance, and desires
income stability with the opportunity to realize meaningful property appreciation. Which answer choice best
describes the investment quadrant and investment vehicle Investor A would most likely select to invest in CRE?
a. Private Debt, Commingled Funds
b. Public Debt, CMBS
c. Public Equity, Individual Assets
d. Public Equity, REITS
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Question 4
a. Using the Neoclassical model of Investment, mathematical equations and graphs, explainthe real cost to rental firms of owning capital. b. Account for what motivates rental firm’s investment decisions? c. With the use of the neoclassical model of investment, explain what would happen to therental price of capital, the cost of capital, and investment if a hurricane destroys someportion of the capital stock.
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Consider the sources and uses statements for the two sectors, X and Y, when
answering the next two questions:
Sector X
Sector Y
U
U
Net Worth
85
72
Real Assets
101
63
Financial Assets
43
27
Financial Liabilities
59
18
Totals
144
144
90
90
Which of the following statements is(are) true? ht
1. Sector X is a saver
I1. Sector Y is an SSU
III. Sector X is a DSU
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4
-Why investors are interested in crude oil?
-What to write in the introduction for chapter 1 in research methodology?
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Multinational Finance & investment
Q2
b) Do you agree with the following statement? And explain why.
“The Capital Asset Pricing Model [CAPM] assumes that the stock market is dominated by welldiversified investors who are concerned with specific risk. “
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Q19
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QUESTION 36
When evaluating an investment or project, Companies need to consider risk as a factor because:
OA. A. All projects carry the same level of risk
B. B. All projects do not carry the same level of risk
C.C. Risk allows a company to measure the relative Net Present Value of an investment
OD. D. Both B & C
QUESTION 37
The Coefficient of Variation is the best measure of risk because:
OA. A. It is a relative measure of risk, allowing companies to measure projects with different expected values.
B. B. Is an absolute measure of risk
O C.C. Is harder to calculate
OD. D. Is never used
QUESTION 38
Standard Deviation is an absolute measure of risk because
A. It allows companies to measure projects with different expected values
B. It measures risk in an absolute fashion, risk is measure based on the expected value.
C.It can only be used to compare projects with the same expected value.
D. Both B & C
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Pls help on this question ASAP
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Facing the question of whether to buy and hold an asset or whether to buy one asset rather than another, which of the following factors must be considered by an individual investor?
A
Investor's wealth.
B
Expected return on one asset relative to alternative assets.
C
Risk of one asset relative to alternative assets.
D
All of the above must be considered.
Which of the following is correct about the expected return on a particular asset?
Question 6 options:
A
If the asset's beta is 1.0, then the expected return on that asset is equal to the risk-free rate of return.
B
If the asset's beta is zero, then the expected return on that asset is greater than the risk-free rate of return.
C
If the asset's beta is zero, then the expected return on that asset is equal to the risk-free rate of return.
D
If the asset's beta is greater than 1.0, then the…
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q15
Which type of brokerage account permits the broker to buy and sell shares for the investor without first contacting the investor for approval?
a.
Discretionary Account
b.
All the options are wrong
c.
Margin Account
d.
Cash Management Account
q16
Buying assets that yield a return greater than the minimum acceptable hurdle rate is a part of which core principles of Finance.
a.
Cost principle
b.
Investment principle
c.
Dividend principle
d.
Financing principle
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Which of the following is an approach to value? Pick the best answer. Question 1 Select one: a.Discounted cash flow b. Asset based c. Comparable companies d. Industry rules of thumb
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QUESTION 13
Within the capital markets, how will a flatter slope impact property values, assuming all else remains constant?
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Multiple Choice Questions
1. The following statements are correct for the Economic Value Added (EVA), except,
A. The most conventional way to determine the value of the asset is through its economic value added.
B. Economic value Added (EVA) is a convenient metric in evaluating investment as it quickly measures the ability of the firm to support its cost of capital using its earnings
C. EVA is the excess of the company’s equity after deducting the cost of capital.
D. The general concept here is that higher EVA is better for the firm
2. Ernesto, Inc. has projected average earnings every year of P 100 million. Debt to Equity Ratio is 3:1. After tax cost of debt is 5% while cost of equity is 10%. The Board of directors of the company decided to sell the company for P 1 Billion. Compute for the Economic Value Added. (EVA).
A. 5 Million
B. P 50 Million
C. P 0
D. P 25 Million
3. SPRO Corp is planning to expand and new projects is expected to have an EVA of P200,000. The annual coast of…
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Hello
There are to explanation quesiton. Can you help me to understance the difference betwen APT and CAPM and the empirical finding when testing for CAPM
.
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Question 18 In a perfectly free economy, all buyers and sellers are what? A. utility users B. utility creators C. utility maximizers D. utility diminishers
Question 19 Which of the following is the term for a situation in which manufacturers sell to firms only if the firms charge a certain price for the goods? A. retail price maintenance agreements B. bid rigging C. exclusive dealing arrangements D. price discrimination
Question 20 An oil company is expanding, but no new oil fields are available. They therefore must resort to the expensive and less-efficient practice of extracting petroleum from oil sands. This is known as __________. A. the principle of increasing marginal cost B. the principle of gross marginal utility C. the principle of diminishing marginal utility D. the principle of increasing marginal utility
Question 21 The undesirable and unintended contamination of the environment because of the manufacture or use of commodities is commonly referred to as __________. A.…
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Briefly discuss
NPV/IRR
Purchasing Power Parity
Cashflow issues
Capital Asset Pricing Model (CAPM)
Baumol
Miller Orr
Risk of investment.
Economic Order Quantity
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BMF A Discussions > Which Investment Opportunity Is Best?
Discussion Details
1. Money is (for obvious reasons) extremely important in our society and has been for several years. Acquiring it, however, can be easier said than done, which is why using investment
opportunities can be advantageous. However, like any good thing, it is risky and the pros and cons of it must be taken into account.
2. Think of two investment opportunities and compare them to each other. Give a brief outline of what they are, how they work, and what kind of results can be expected from them. Also go
over the risks associated with them and what could go wrong in your investment.
3. Make an argument for one of the two investment opportunities. Suppose you are about to make an investment of $1,000-which opportunity would give you the most for that money?
Why? Give strong support for your reasoning.
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- Hello i just saw the company policy, this question is the second time i am asking but i would like to get help with question 6arrow_forwardQ3a Please assist to answer Q3a in detail write uparrow_forwardCurrent Attempt in Progress Describe how investing in more than one asset can reduce risk through diversification. B I U T₂ T² T = = || Earrow_forward
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