a) A zero-coupon bond issued by Standard Bank is currently selling for $312 and matures in exactly 10 years. Calculate the semi-annual discount rate for this bond. (4 marks) b) Absa Bank has an outstanding 10 percent bond issue with a face value of $1000 per bond and three years to maturity. Interest is payable annually. The bonds are privately held by Dikgang Pension Fund (DPF) and wishes to sell them to another party. It estimates that, in the current market conditions, the bonds should provide a nominal return of 14 percent. Calculate the price of the bond that should be realised on the sale. c) Differentiate between the following: i) Money markets and capital markets. (4 markets) ii) Primary markets and secondary markets. (4 markets) Question 3 An analyst at Standard Bank has been monitoring the performance of two large scale businesses to invest on behalf of his clients. The two companies Lemme Health Services and Manong Industries are based in Maseru and the analyst have been provided the following information on the stocks. Use the information to answer questions that follow: a) What is the expected retum on Lemme and Manong stocks? ( 6 marks) b) Calculate the variance and standard deviation for Lemme and Manong. ( 8 marks) c) What is the expected return of an equally weighted portfolio of the two stocks? ( 4 marks) d) Briefly, differentiate between systematic risk and firm specific risk. (2 marks) SECTION C Answer all question in this section, total marks =20 marks Boroko Group Lid is expanding its chain of retail stores in Gaborone through the purchase of Payless Store in Kagiso Mall at a cost of $350000. A further cost of $150000 is to be included to refurbish the property with new equipment for the store Cash flows for the business are projected as below: The equipment will depreciate to zero over the period and Boroko Group is confident that the business could be soid for $350000 after the sixth year. To establish the viability of the project, Boroko will use return on capital employed