Question 6 (13 points)

(a) As an investor, you can use either standard deviation or beta as a measure of risk

for your investment. Which measure do you think you is more appropriate for and

why? (4 marks)

(b) You are interested in buying a computer that costs $1,500 today. You can choose

to buy now and pay later (BNPL) with four quarterly instalments of $400. What is the

effective annual rate of the purchase using BNPL? Briefly explain your answer. (3

marks)

(c) Large financial institutions, such as CBA, provide intermediated and non-

intermediated finance. Describe the process of non-intermediated finance. How do

financial institutions generate revenue from non-intermediated finance? (6 marks)

(Total marks: 4 + 3 + 6 = 13 Marks)

show all working on paper