Question $1$

Panel A and B of Table $1$ present the average monthly household income and expenses by type of dwelling, respectively, in $2023.$

$\backslash$table$[[$Panel A: Average Income by Type of Dwelling $($S$$)],[\backslash$table$[[$HDB $1-$& $2-],[$Room Flats$]],\backslash$table$[[$HDB $3-],[$Room$],[$Flats$]],\backslash$table$[[$HDB $4-],[$Room$],[$Flats$]],\backslash$table$[[$HDB $5-$Room$],[$& Executive$],[$Flats$]],\backslash$table$[[],[$Other Apartments$]],\backslash$table$[[$Landed$],[$Properties$]]],[3,897,7,750,11,319,14,665,22,560,28,169],[$Panel B: Average Monthly Household Expenditure by Type of Dwelling $($S$$)],[1,545,2,709,3,933,5,504,7,963,10,500]]$

Additional information:

Average household CPF contribution rate $($retirement fund$)$ is fixed at $20\%$ of monthly salary.

Emergency fund is set at $20\%$ every month for all type of dwelling.

Savings interest rate is assumed and fixed at $3\%$ p$.$a$.$ throughout the period.

Average S&P $500$ index fund return is $10\mathrm{.}5\%$ p$.$a$.$ throughout the period.

Required:

a$.$ Compute the average monthly disposal income of all type of dwelling.

$(4$ marks$)$

b$.$ If you are a junior financial advisor and would like to advise the household of HDB $1$and $2-$room flats to achieve $$$1,500,000$ in $30$ years, how should they allocate their monthly disposal income in part $($a$),$ asset allocation, to achieve their financial goal? What alternatives are available for them?

$(6$ marks$)$ Question $3$:

Kim Huat considers investing in a Bond to diversity his investment profolio. He shorstlisted two bonds, Bond A and Bond B$.$ Specially, Bond A is a semi$-$ annual coupon bond with face value of $$1000,2-$year maturity paying $8\%$ p$.$a$.$ coupon rate and yield to maturity is $7\%$ p$.$a$.$ Bond B is a semi$-$ annual coupon bond payng $6\%$ p$.$a$.$ coupon rate with face value of $$1000,$ maturity of $2-$year and yield to maturity is $7\%$ p$.$a$.$

Required:

$($a$)$ Compute the bond price for Bond A and Bond B$.$ What are their bond price after $1$ year.

$($b$)$ If Kim Huat expects that the interest rate would decrease by $1\%$ one year later, which bond Kim Huat should invest now? why?