Question 60

Suppose an investor has two assets whose standard deviation of returns is 25% and 45%. The assets are perfectly negatively correlated. What asset weights will eliminate all portfolio risk?

Select one:

A. 64% and 36%.

B. 34% and 66%.

C. 25% and 45%

D. 50% and 50%.

question 55

An investor will receive Shs 20,000, Shs 15,000, and Shs 30,000 at the end of years one, two, and three from today respectively, and leave a balance of Shs 1,000. If the rate of interest during years one and three is 8 % per annum and 13% per annum respectively, and the present value of the cashflows is Shs 60,000, what is the rate of interest in year two?

Select one:

A. 12.50%

B. 18.97%

C. 25.45%

D. -4.92%

question 49

A share is expected to pay a dividend of Shs 30/= in one years time. Thereafter, dividend growth is expected to be 5% per annum for two years and 2% per annum subsequently. If the market capitalization rate is 16% per annum, what is the value of the share?

Select one:

A. Shs 236.30

B. Shs 200.60

C. Shs 151.40

D. Shs 214.30