QUESTION ONE:

a.Discuss the short-term investment vehicles that investors can take up in order to boost their working capital.

b.Elaborate on the economic functions of financial markets.

c.A Portfolio Manager has these two bonds in his portfolio:-

Bond A:Coupon 10% (paid semi-annually) time to maturity 18 years,

YTM 10%

Bond B:Coupon 10.25% (paid semi-annually) time to maturity 18.5

years, YTM 10.2%

The historical analysis shows that the difference between the prices of the two bonds has never been more than 10 basis points.The manager believes that within the next six months to the nearest coupon payment the observed

anomaly will be eliminated.

Required:-

D.i.Determine the expected profit from the bond switch.

ii.Discuss the characteristics of bond.

QUESTION TWO:

a.Discuss the techniques of passive portfolio management.

b.Using a suitable diagram, explain the differences between systematic and unsystematic risk.

QUESTION THREE:

a.Bond with durations 4, 9, 11, and 14 years respectively are available for immunization purposes.Indicate how the Investment Manager can create:-

i.A focused (bullet) portfolio.

ii.A barbell portfolio from the same.

b.Explain the different model definitions that a client can adopt when purchasing securities.

QUESTION FOUR:

a.Differentiate between fundamental and technical analysis in securities.

b.What are the advantages of investing in the international arena?