Problem 1 (20 points)

a. Every investment decision has two very critical components, namely risk and return. The basic element of all investment decisions is the tradeoff between expected return and risk. Explain why these two components should be considered by any investors before making any investment decision. (10 pts)

b. Provide examples of financial assets in Indonesia. Explain the characteristics of the risk and return of each asset. If you were an investor, what type of asset would you choose? Explain your reasoning. (10 pts)

Problem 2. (20 points)

The data below show year-end closing price and calendar year dividend data of PT. Bank Central Asia Tbk, PT. Bank Negara Indonesia (Persero) Tbk, and PT. Astra International Tbk.

a. Calculate Return of the 3 stocks (Arithmetic mean and Geometric mean). When should the Arithmetic mean and Geometric mean be used to appropriately measure investment returns?. (8 pts)

b. Calculate Variance and Standard Deviation of those 3 stocks (based on Arithmetic mean). Interprete your results. (8 pts)

c. Calculate the cumulative wealth index for 2011 - 2019, for the 3 stocks. Assuming an initial investment of Rp.100.000.000. (4 pts)

PT. BCA Tbk PT. BNI (Persero) Tbk PT. ASII Tbk End of Calendar End of End of Year Year Year Year Calendar Year Year Calendar Year Closing Dividends Closing Dividends(Rp) Closing Price (Rp) Dividends(Rp) (Rp) Price (Rp) Price (Rp) 2010 6,400 42.5 3,875 22.35 5,455 470 2011 8,000 113.5 3,800 65.98 7,400 1,730 2012 9,200 113.5 1,870 62.48 7,550 1,446 2013 9,600 116 3,950 113.35 6,800 214 2014 13,125 125 6,100 291.42 7,425 216 2015 13,300 153 4,990 144.55 6,000 216 2016 15,500 175 5,525 122.534 8,275 168 2017 21,900 340 9,900 425.614 8,300 168 2018 26,000 260 8,800 255.555 8,225 190 2019 33,425 355 7,850 201.29 6,925 211