1. Compare the performance of the two equity funds (Fund A and Fund B), based on the information given below. (20 Marks)

Fund	Average Return (%)	Standard deviation of returns (%)	Beta
A B	19.5 15.7	15.5 9.5	1.5 1.2

Additional information:

The risk-free rate is 5% and the return on the market index is 12%. The tracking error is 8.5% for Fund A, and 4% for Fund B. Evaluate and discuss.

2. Jason and Mary purchase a house for $550,000. They obtain a home loan for 80% of the purchase price. They wish to pay off the mortgage monthly over 25 years. Assume a fixed interest rate of 4.5% p.a. What will be the amount of each monthly repayment? (20 Marks)

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