Question 01:

a) If the expected return of the market is 9% and the risk free return is 6% calculate beta when the risk premium is:

i. 3%

ii. 2%

iii. 4%

b) What is the rate of return for a company if its is 1.5, risk free rate of return is 8% and the market rate or return is 20 %.

Question 02:

Discuss steps which Australia can use to reduce its Current Account deficit.

Question 03:

a) Go to http://www.dfat.gov.au/geo/fs and click on Australia. Using the figures in the fact sheet explain the diminishing importance of the US economy to Australia and the increasing importance of Chinese economy to Australia.

b) Using the above website construct a table which allows you to compare Australia with a country of your choice under the following headings:

• GDP per capita (US$).
• Real GDP growth (% change yoy).
• Current account balance (% of GDP).
• Principal Export destinations and Import Sources.
• Australian total merchandise trade relationship rating.

Question 04:

a) Name and briefly explain three different types of debt security.

b) If BHP is issuing $1,000,000,000 worth of $10,000 face value 10% coupon bonds at par value, what is the price of each bond on the issue date?