Question 5 (this question has three parts (a), (b) & (c)) (a) (0) A wholesale investor sold a tranch of CBA shares on the ASX. Is this a primary or secondary market transaction? Explain your answer. (ii) What is an IPO? Why might a company choose to raise funds through an IPO rather than in a private equity arrangement? (Marks 1 + 1 = 2) (b) John has a six-stock portfolio that has a market value equal to $500,000. The portfolio's beta is 1.2. John is considering selling a particular stock from his portfolio to help pay some expenses. The stock is valued at $150,000, and if he sells it, the portfolio's beta will increase to 1.4. () What is the beta of the stock John is considering selling? (ii) Explain the implications of your results for John's decision to sell a particular stock. (Marks 1 + 2 = 3) (c) Steve has bought a house for $600,000 with 30% cash down payment. The remaining balance is financed by a 30-year mortgage at 6% per annum. The mortgage installments are paid monthly and the first installment is due now. (i) How much is Steve's monthly mortgage repayment? (ii) What are the implications of having the payment due at the beginning of the month as opposed to the end of the month? (ii) Re-calculate the monthly mortage repayment if the first installment is due at the end of the month, (Marks 2 + 2 + 1 = 5)