Section B: $Y_{0U}$ are required to answer one question from this section.

Question $3$

$($a$)$ Hi$-5$ Fund invests in a portfolio of commercial papers, treasury bills, and negotiable certificates of deposit.

The fund issues its shares continuously to investors and redeems shares from its investors at net asset value.

For the $2023$ financial year, the Fund started the year with $GH!in800$ million in assets and $100$ million shares

in issues. The fund distributed a dividend of $GH0\mathrm{.}35$ per share to its shareholders during the year. By the

end of the year, the value of the fund's portfolio of assets had increased by $15\%.$ The fund charges

management fees of $1\mathrm{.}25\%$ of the amount invested, and that is deducted from the portfolio's assets value at

the end of the year.

Required:

i$)$ Classify the fund based on investment policy. $[2$ marks$]$

ii$)$ Would you describe the fund as a closed$-$end or an open$-$end fund? Explain. $[3$ marks$]$

iii$)$ Compute the annual rate of return to an investor in the fund. $[3$ marks$]$

$($b$)$ Two weeks ago, Owula Jego opened a brokerage account with Rhonda Brokers Ltd$.$ She then puts in an

order for the purchase of $200,000$ shares of Bene Plc$.$ Like other stocks in the economy, the price of Bene

Plc has been falling due to a surge in the performance of the bond market relative to the equity market.

Owula Jego hopes that the price drop will be temporary. He instructed that his purchase order should be

executed when the price drops below GH&$2\mathrm{.}50$ per share. Rhonda Brokers Ltd executed the order today,

buying the $200,000$ shares ordered at GH&$2\mathrm{.}45$ each. Owula Jego financed the purchase with his savings

plus a GH $150,000$ loan from PT Brokers at an annual interest rate of $20\%.$

Required:

i$)$ Would you classify Owula Jego's order as a stop$-$buy order? Explain. $[2$ marks$]$

ii$)$ Compute the initial margin. $[3$ marks$]$

iii$)$ Suppose Rhonda Brokers sets the maintenance margin at $60\%$ and the share price falls further to

GHS$2\mathrm{.}15$ in the coming week. Would Owula Jego receive a margin call? Support your answer with

relevant computations. $[4$ marks$]$

iv$)$ Suppose the share price rises to GH &$3\mathrm{.}10$ per share in a year's time and Bene Plc distributes

dividends of $GH0\mathrm{.}15$ per share to its shareholders. Compute the rate of return on Owula Jego's

investment. $($Assume the investment period is exactly one year$).[3$ marks$]$

$[Total=20$ marks$]$