Financial Analysis of NAB and BHP Portfolio

1
Solution 2:
Answer 2.i:
TimeLine
% 8% 6%
Year 0 1 2 3 4 5
Answer 2.ii:
Formula to calculate the Present value of cash flows
Present value at Time 1
Year Time Cash Flows Interest Rate PVF
0 0 8%
0 1 0 8% 1.000
Present Value at Time 5
Present Value at Time 10
0 0 8%
(Brigham & Michael, 2013)

2
Solution to Question 4:
Answer i:
Formula of Holding Period Return (HPR):
Date Closing Price Question:I Holding Peroid Return
NAB BHP Market NAB BHP Market Portfolio
12/31/2015 26.69 21.91 4154.30
1/31/2016 24.19 22.61 4040.10 -9.37% 3.19% -2.75% -0.57%
2/29/2016 26.24 25.90 4207.30 8.47% 14.55% 4.14% 12.73%
3/31/2016 27.19 31.34 4348.00 3.62% 21.00% 3.34% 15.79%
4/30/2016 27.15 26.97 4448.30 -0.15% -13.94% 2.31% -9.80%
5/31/2016 25.43 28.56 4323.80 -6.34% 5.90% -2.80% 2.23%
6/30/2016 26.54 29.69 4588.50 4.36% 3.96% 6.12% 4.08%
7/31/2016 27.34 30.00 4479.80 3.01% 1.04% -2.37% 1.64%
8/31/2016 27.87 34.65 4480.60 1.94% 15.50% 0.02% 11.43%
9/30/2016 28.00 35.02 4395.60 0.47% 1.07% -1.90% 0.89%
10/31/2016 28.93 37.54 4506.70 3.32% 7.20% 2.53% 6.03%
11/30/2016 29.70 35.78 4695.80 2.66% -4.69% 4.20% -2.48%
0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
HPR
(Monthly Data for NAB, BHP and Market has been exacted from Yahoo Finance and references
for same can be found in reference section)
(References: Yahoo finance: NAB, 2018, Yahoo finance: BHP, 2018 and Yahoo finance:
ASX100, 2018)
Graph for holding period returns

3
01/01/2016
01/02/2016
01/03/2016
01/04/2016
01/05/2016
01/06/2016
01/07/2016
01/08/2016
01/09/2016
01/10/2016
01/11/2016
01/12/2016
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Holding Peroid Returns
NAB
BHP
Market
Time
HPR
Answer ii to iv:
Formula of Annual Holding Period Return (HPR):
Formula of Standard Deviation:
3/31/2016 27.19 31.34 4348.00 3.62% 21.00% 3.34%
4/30/2016 27.15 26.97 4448.30 -0.15% -13.94% 2.31%
5/31/2016 25.43 28.56 4323.80 -6.34% 5.90% -2.80%
6/30/2016 26.54 29.69 4588.50 4.36% 3.96% 6.12%
Answer v:
Graph plot where risk is on X axis and return on Y axis for each of NAB, BHP and Market