Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 3 (50 marks) This question relates to material covered in Topics 1-5. This question addresses the 1 st , 2 nd and 3 rd
Question 3 (50 marks)
This question relates to material covered in Topics 1-5. This question addresses the 1st, 2nd and 3rd subject learning outcomes.
In the table below are the monthly share prices for global resource giant BHP and the ASX All Ordinaries index for the year 1/10/2019 to 30/09/2020.
BHP paid fully franked dividends of $0.9940 on March 5, 2020 and $0.7657 on September 3, 2020.
- Calculate the grossed-up value of the two fully franked dividends paid by BHP (5 marks).
- Calculate the monthly holding period returns (in both $ and %) for BHP (including the grossed-up amount of the dividends paid) for the year of data provided above (5 marks).
- Calculate the average monthly return (%) for BHP (2.5 marks).
- Calculate the annual holding period return (in both $ and %) for BHP (including the grossed-up amount of the dividends paid) (2.5 marks).
- Calculate the risk of BHP as measured by its standard deviation for the year (5 marks).
- Calculate the monthly holding period returns (%) for the ALL ORDS (5 marks).
- Calculate the annual holding period return (%) for the ALL ORDS (2.5 marks).
- Calculate the average monthly return (%) for the ALL ORDS (2.5 marks).
- Calculate the risk of ALL ORDS as measured by its standard deviation for the year (5 marks).
- Using Excel, prepare a line graph showing the monthly holding returns for both BHP and the ALL ORDS index (5 marks).
- If you had $10,000 to invest today would you invest in BHP shares or in an index fund that matched the return of the ALL ORDS index? Give a full explanation of your conclusions including the use of historical risk and return (10 marks).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started