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\nQuestions: 4\tStudent ID No..\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026.
\nStudent Full name: …\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026<\/p>\n
UNIVERSITY OF TASMANIA
\nTASMANIAN SCHOOL OF ECONOMIC AND BUSINESS<\/p>\n
Mid Semester Test<\/p>\n
BFA607 – Investment Planning<\/p>\n
Instructions:<\/p>\n
\u2022\tWrite your student number clearly at the top of your test answer.
\n\u2022\tThis test paper is worth 30% of your total semester assessment and will be marked out of 40.
\n\u2022\tAnswer ALL four (4) questions.
\n\u2022\tShow all supporting calculations. Marks will be deducted if supporting calculations are not shown.
\n\u2022\tIt is essential that you follow the University\u2019s academic integrity values. The consequences of plagiarism, collusion, exam cheating, contract cheating, fraud, misrepresentation and other breaches of academic integrity can be severe.
\n\u2022\tStudents engaging in any form of academic misconduct may be dealt with under the Ordinance of Student Discipline, and this can include imposition of penalties that range from a deduction\/cancellation of marks to exclusion from a unit or the University. Details of penalties that can be imposed are available in the Student Academic Integrity Ordinance.
\n\u2022\tYour answers must be typed in the test paper (a scanned copy of handwritten work will not be accepted). You must submit your answers to the \u201cMid-semester test\u201d Dropbox under \u201cAssessments \/ Assignments\u201d on MyLO before 2:00 pm on Saturday, 27 August.<\/p>\n
Question 1 [10 marks]
\na)\tYou are considering the purchase of AMDEX Company shares. You anticipate that the company will pay dividends of $2.00 per share next year and $2.25 per share the following year. You believe that you can sell shares for $17.50 each two years from now ex-dividend. If your required rate of return is 12 percent, what is the maximum price that you would pay for a share?
\n[6 marks]<\/p>\n
b)\tDescribe and contrast the following ordinary share dividend valuation models: (i) zero growth, (ii) constant growth and (iii) mixed growth.
\n[4 marks]<\/p>\n
Question 2 [9 marks]
\na)\tYou have included the following securities in your portfolio:<\/p>\n
Security\tInvestment\tReturn\tBeta
\nA\t$4,000\t6.2%\t0.95
\nB\t$7,500\t4.8%\t1.48
\nC\t$8,200\t7.1%\t1.11
\nD\t$5,300\t5.9%\t0.68<\/p>\n
Required:
\ni.\tCalculate the expected returns of the portfolio.
\nii.\tCalculate the beta of the portfolio.
\n[6 marks]
\nb)\tExplain the concept of diversification and its benefits.
\n[3 marks]<\/p>\n
Question 3 [9 marks]<\/p>\n
You are considering acquiring shares in Tomato Tours Ltd. You have observed the following returns on this share over the last four years:<\/p>\n
Year\t1\t2\t3\t4
\nReturn\t\u2013 8%\t3%\t16%\t5%<\/p>\n
Required
\nWhat is the average return and standard deviation of the return on Tomato Tours shares?<\/p>\n
Question 4 [12 marks]
\nPlease review the enclosed IPO for Clarity Pharmaceuticals Ltd \u2013<\/p>\n
Radiopharmaceutical therapies and imaging<\/a><\/p><\/blockquote>\n