Alternative investments are also part of UNISA retirement plan portfolio. Mabwe has a strategy of rolling forward a long position in platinum futures traded on JSE. Mabwe's expectations are as follows: Electricity supply disruptions in South Africa, the world's dominant platinum producer, will cause platinum supply to fall and spot prices to rise, interest rates will fall, and the convenience yield on platinum will decrease. Mabwe observes that his expectations are not yet reflected in platinum futures prices. Mabwe reviewed the recent performance of the platinum futures and has found that for the last 12 months, the platinum futures had a roll return of negative 6.4% and a spot return of 10.2%. The collateral return on the platinum futures over the past 12 months was 7.1%. (iii) Determine, given that Mabwe's market expectations are correct, whether an increase, a decrease, or no change in each of the following return components should be expected: Justify each response with one reason (9) a) spot retum (price return) b) collateral return (collateral yield) c) roll return (roll yield) (iv) Calculate the total return on the platinum futures. 2 INV4801/101 (v) Discuss the potential benefits to UNISA retirement plan of adding commodities as an asset class. (6)| Alternative investments are also part of UNISA retirement plan portfolio. Mabwe has a strategy of rolling forward a long position in platinum futures traded on JSE. Mabwe's expectations are as follows: Electricity supply disruptions in South Africa, the world's dominant platinum producer, will cause platinum supply to fall and spot prices to rise, interest rates will fall, and the convenience yield on platinum will decrease. Mabwe observes that his expectations are not yet reflected in platinum futures prices. Mabwe reviewed the recent performance of the platinum futures and has found that for the last 12 months, the platinum futures had a roll return of negative 6.4% and a spot return of 10.2%. The collateral return on the platinum futures over the past 12 months was 7.1%. (iii) Determine, given that Mabwe's market expectations are correct, whether an increase, a decrease, or no change in each of the following return components should be expected: Justify each response with one reason (9) a) spot retum (price return) b) collateral return (collateral yield) c) roll return (roll yield) (iv) Calculate the total return on the platinum futures. 2 INV4801/101 (v) Discuss the potential benefits to UNISA retirement plan of adding commodities as an asset class. (6)|