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QUESTION TWO (a) Robert Chilufya's employer offers its workers a two-month paid sabbatical every seven years. Robert, who just started working for the firm, plans

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QUESTION TWO (a) Robert Chilufya's employer offers its workers a two-month paid sabbatical every seven years. Robert, who just started working for the firm, plans to spend his sabbatical touring Europe at an estimated cost of K25,000. To finance his trip, Robert plans to make six annual end-of-year deposits of K2,500 each, starting this year, into an investment account earning 4 percent interest semi-annually 0 Will Robert's account balance at the end of seven years be enough to pay for his trip? (8 marks) (ii) Suppose Robert increases his annual contribution to K3,150. How large will his account balance be at the end of seven years? (7 marks) (b) Distinguish between systematic and unsystematic risk in relation to portfolio theory (10 marks) Total (25 marks)

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