Alpha Investors are a UK investment consultancy who have recently been appointed as the fiduciary manager to a UK defined benefit pension plan with a retail company sponsor. The trustees of the pension plan have asked Alpha Investors to use their investment expertise to increase the expected return of the asset portfolio and to update the portfolio asset mix, which is currently fully invested in sovereign bonds. (i) List the characteristics of the liabilities that Alpha Investors should consider as part of their investment review. [5] (ii) Outline probable reasons why the pension plan assets may have been fully invested in sovereign bonds. [4] (iii) Suggest possible reasons why Quantitative Easing and a low interest rate environment could increase the challenge of managing pension plan assets. [5] A senior portfolio manager at Alpha Investors has recommended moving a large proportion of the assets backing the pension plan into the following asset classes: ? corporate bonds (with a large proportion invested in those issued by technology start-ups) ? mortgages (residential and commercial) ? infrastructure debt. (iv) Describe how the risks associated with these assets impact cashflow matching for the pension plan. [6] (v) Outline the additional considerations for the pension plan of investing in these assets. [6] Alpha Investors have recently recommended one of their funds as a suitable investment for the pension plan's assets. The plan's sponsor believes this would develop a conflict of interest, since this recommendation, if carried out, will increase Alpha's fees. (vi) Suggest possible responses that Alpha Investors could make to this challenge. [6] (vii) Give examples of conflicts of interest that Alpha Investors might be subject to, even if the pension plan trustees instructed Alpha Investors not to invest in its own funds.

Describe five ways in which the scarcity concept of resources is of significance to a country. Describe the five different types of price elasticities of demand. Agricultural products normally have a low elasticity of supply. Describe five reasons that may account for the situation. The price for imported cars in country Y has recently gone up. Explain five factors that may account for the increase in price. Specialization of labor as a factor of production has certain limitations. describe five of these limitations.Specialization of labor as a factor of production has ceratin certail limitattions. Describe five of these limitations. Describe five forms of internal economies of scale in a firm. Describe in detail the limitations of monopoly as a form of market structure. There are certain principles that may be associated with the income approach of measuring national income. Describe five such problems. Describe the principles of a good tax system. Country X has in the recent been experiencing demand pull inflation. Explain five causes of such inflation. Many developing countries experience persistent balance of payments deficitits. Explain the measures that would be taken to reduce such deficits.16 A government increases the rate of income tax in order to pay for extra transfer payments, including cash benefits to the poor. What must occur as a result of this? A It changes the distribution of income. It ensures the equality of incomes. C It leads to more people paying income taxes. D It reduces the level of unemployment. 17 The standard rate for Value Added Tax (sales tax) is 20% in a country. Different consumers buying the same product have to pay the same amount of tax. What kind of tax is this? A direct B progressive C proportional D regressive 18 The diagram shows the demand curve D, and supply curve S, for a good. The government introduces a subsidy to encourage production. price S 30 25 20 " D 0 4 5 quantity What will be the total cost of the subsidy to the government? A $40 B $50 C $100 D $150