The Copperbelt University Directorate of Distance Education and Open Learning BS414: Money and Banking Assignment 1 All the questions carry equal marks, candidates are required to answer any two. 1. Critically explain the importance of financial markets in Zambia. (Hint explain why it is important to regulate the financial system in Zambia. (10 marks) 2. Calculate the duration (weighted averages of the maturities of the cash payments) for a ten-year 12% coupon bond with a face value of$1500 (10 marks) 3 Phoenix Corporation has pulled off a miraculous recovery. Four years ago it was near bankruptcy. Now it is making excellent progress Phoenix has just announced a 1 per share dividend, the first since the crisis hit. Analysts expect an increase to a 'normal" 3 dividend as the company completes its recovery over the next three years. After that, dividend growth is expected to settle down to a moderate long- term growth rate of 6%. Phoenix stock is selling at 50 per share. What is the expected long-run rate of return from buying the stock at this price? Assume dividends of E1, 2 and E3 for years 1, 2 and 3. A little ial and error will be necessary to find r. (10 marks) Due date: 29h May, 2018. e0