A portfolio manager is considering the performance by analysing the following information on a holding in the company 9 Shot Plc.

The stock was initially purchased for 120,000 and then sold for 137,500 Commission charges on each transaction were 20 Over the life of the holding a total of 7,500 was received in net dividends The stock was held for a period of 3.25 years

Use the above information to calculate;

a) the simple return and (2 marks)

b) the compound AGR achieved from this stock (1 mark)

c) explain why it may be beneficial to calculate the compound annual growth rate of the portfolio (1 marks)

Question 9 ( 5 Marks )

Consider a small mixed portfolio containing the following securities:

a) A UK Government bond holding, paying a coupon rate of 6.75% which is due for redemption in 7 months' time b) A significant holding in cash c) A US Equity holding which is dividend bearing. d) A modest holding in a UK Smaller Company stock with a current Beta of 2.8 e) A holding of 'C' Grade Corporate Bonds

Given the following five types of risk, indicate which one of the above securities each risk would be most likely to be applicable to;

Credit risk

Volatility risk

Re-investment risk

Foreign Exchange risk

Inflation risk