A) Following article was published in Australian Financial Review.

i) Based on your understanding of Governments macro-economic policies, explain why central banks may increase interest rate in certain economic conditions. Discuss briefly how such a decision may affect consumers and investors in the market. (Max 250 words)

ii) Why do you think the news of interest rate increase adversely affects stock prices? (Max 150 words)

B) Following is the stock price chart for Appen Ltd on ASX

Ben purchased 1000 stocks of Appen on 12^th September at the price of $3.80 per share using the margin trading facility offered by his broker. The broker requires 50% initial margin and 40% maintenance margin. There are no transaction fees and the broker charges no interest or fees for the margin trading facility. On 14^th September, Ben sells the Appen stocks he purchased at the price of $3.6 per share.

i) Calculate the rate of return he earned as a percentage of his initial investment.

ii) What would have been the rate return from Bens investment in Appen have had he not used the margin trading facility?

iii) Based on your responses above discuss the risks and the benefits of using margin trading strategy.

ASX falls 0.6pc on interest rate wariness Equities Richard Henderson new signals that interest rates could shoot far higher than their present levels. 4.0 3.80 AUD Mon, 12 Sept 13:30 3.9 ASX falls 0.6pc on interest rate wariness Equities Richard Henderson new signals that interest rates could shoot far higher than their present levels. 4.0 3.80 AUD Mon, 12 Sept 13:30 3.9