Investment and Net Asset Value

984 WordsOct 29, 20124 Pages
Assignment 1 1. Suppose you discover a treasure chest of RM10 billion in cash a. Is this a real or financial asset? b. Is society any richer for the discovery? c. Are you wealthier? d. Is anyone worst off as a result of the discovery? 2. The average rate of return on investment in large stocks has outpaced that on investments in T-Bills by about 8% since 1926 in US. Why, then, does anyone invest in T-Bills? 3. You see an advertisement for a book that claims to show how you can make RM1 million with no risk and with no money down. Will you buy the book? Why? 4. You are bullish on Telekom stock. The current market price is RM50 per share, and you have RM5,000 of your own to invest. You borrow an additional…show more content…
The inflation rate was 4 percent over the same period. The exact actual growth rate of your purchasing power was: 15. Toyota stock has the following probability distribution of expected prices one year from now: [pic] If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share, what is your expected holding-period return on Toyota? 16. You buy 300 shares of Qualitycorp for $30 per share and deposit initial margin of 50%. The next day Qualitycorp's price drops to $25 per share. What is your actual margin? 17. The Profitability Fund had NAV per share of $17.50 on January 1, 2009. On December 31 of the same year the fund's NAV was $19.47. Income distributions were $0.75 and the fund had capital gain distributions of $1.00. Without considering taxes and transactions costs, what rate of return did an investor receive on the Profitability fund last year? 18. Assume that you purchased 200 shares of Super Performing mutual fund at a net asset value of $21 per share. During the year you received dividend income distributions of $1.50 per share and capital gains distributions of $2.85 per share. At the end of the year the shares had a net asset value of $23 per share. What was your rate of return on this investment? 19. An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.13 and a variance

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