Question
Question 01: 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%
Question 01:
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?
Question 02:
a) What caused the Global Financial Crisis?
b) Why was the impact of Global Financial Crisis minimal on Australia?
Question 03:
The following information has been determined for Ace Engineering Ltd.
- The correlation coefficient of the returns of the security with that of the market is 0.6
- The standard deviation of return of Ace Engineering share is 6%.
- The standard deviation of return on the market portfolio is 4%.
- The risk free rate of return is 6%.
- Expected return on market is 15%.
Required:
a) Calculate the Beta coefficient for Ace Engineering.
b) What is the expected rate of return on Ace Engineering shares?
c) Is Ace Engineering a risky security? Why?
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