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Impact of Diversification on Portfolio Risk and Return

   

Added on  2019-11-26

12 Pages2558 Words158 ViewsType: 158
FinanceTest PrepEconomics
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Running head: FUNDAMENTALS OF FINANCEFundamentals of financeName of the Student:Name of the University:Author’s Note:Course ID:
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FUNDAMENTALS OF FINANCE1Table of ContentsQuestion 1:.................................................................................................................................3a.i) Savings of Jenifer after 5 years:...........................................................................................3a.ii) Deposits meet the 20% requirement:..................................................................................3a.iii) Money she needs to borrow after 5 years to buy the house:..............................................3b.i) Fortnight instalment amount:...............................................................................................4b.ii) Repayment made by Jenifer over 20 years:........................................................................4c.i) Jenifer’s monthly repayment for 10 years loan tenure:.......................................................5c.ii) Total repayment in 10 years and the interest:.....................................................................5c.iii) Mentioning that she uses 40% of the average salary after promotion to make thepayment:.....................................................................................................................................6d.i) Evaluating the new option to meet the requirements of monthly loan amount:..................6d.ii) Stating whether Jenifer should accept offer from her parents:...........................................6Question 2:.................................................................................................................................7a.i) Depicting Portfolio returns of AB:......................................................................................7a.ii) Depicting Portfolio returns of AC:.....................................................................................7a.iii) Calculating expected return of Portfolio BC:....................................................................8b) Mentioning the impact of risk on the portfolio:.....................................................................9c) Mentioning about diversification in finance and its impact on the portfolio:......................10Question 3:...............................................................................................................................11i) Mentioning about prospectus, stating when it is issued, and depicting why it is needed to belodged in Australia:..................................................................................................................11ii) Mentioning the requirements of ASX, while depicting the industry Sienna is listed:........11iii) Stating the share issue price and mentioning the capital that will be raised from the IPO:..................................................................................................................................................12
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FUNDAMENTALS OF FINANCE2iv) Mentioning the process for acquiring shares of Sienna after IPO:.....................................12v) Mentioning the relevant decision of buying shares in Sienna:............................................12Reference and Bibliography:....................................................................................................13
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FUNDAMENTALS OF FINANCE3Question 1:a.i) Savings of Jenifer after 5 years:ParticularsAmountSalary per month6,666.67 number of months in 5 years60Interest rate0.25%Savings per month2,666.67 Total savings after 5 years172,391.23 a.ii) Deposits meet the 20% requirement:ParticularsAmountProperty price 600,000 20% loan requirement120,000.00 Total savings after 5 years172,391.23 The total savings is relatively at 172,391.2, which is higher than the 20%requirements of the bank.a.iii) Money she needs to borrow after 5 years to buy the house:ParticularsAmountProperty price (A)600,000 Savings after 5 years (B)172,391.23 Loan amount (C=A-B)427,608.77 b.i) Fortnight instalment amount:ParticularsValueN520 time20Interest rate4%I0.15%
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