Download - Tutorial 1 - Investment Overview n Risk Return Concepts (Student)(2)

8/18/2019 Tutorial 1 - Investment Overview n Risk Return Concepts (Student)(2)

1/3

NGEE ANN POLYTECHNICSCHOOL OF BUSINESS & ACCOUNTANCY

INVESTMENTS (IV)

Tutorial 1 – Investments Overview + Risk & Return Concepts

Note to students: Typed questions are only given for Tutorial 1. You have to refer to thetextbook for the full questions from Tutorial 2 onwards.

Concept Question

Chapter 12 – age !"#$ %uestion "

Classify the following events as mostly systemati& or mostly unsystemati&. 's the distin&tion&lear in every &ase(

a) *hort+term interest rates in&rease unexpe&tedlyb) The interest rate a &ompany pays on its short+term debt borrowing is in&reased by its

bank&) ,il pri&es unexpe&tedly de&lined) -n oil tanker ruptures &reating a large oil spille) - manufa&turer loses a multi+million+dollar produ&t liability suitf) - *upreme Court de&ision substantially broadens produ&er liability for in/uries

suffered by produ&t users

Questions and Problems

Chapter 1 – age "0$ %uestion

- parti&ular sto&k has a dividend yield of 1.2. 3ast year the sto&k pri&e fell from 4#5 to456. 7hat was the return for the year(

Chapter 1 – age "0$ %uestion 11

-n investment has an expe&ted return of 12 per year with a standard deviation of #. -ssuming that the returns on this investment are at least roughly normally distributed howfrequently do you expe&t to lose money(


Your grandfather invested 41888 in a sto&k 58 years ago. Currently the value of his a&&ountis 4"2!888. 7hat is his geometri& return over this period(


- sto&k has had the following year+end pri&es and dividends$

Year Price ($) Dividend ($)8 1".25 +1 15.#1 8.152 1#.2 8.10" 15.10 8.28! 1.12 8.2!5 28.!" 8.20

7hat are the arithmeti& and geometri& returns for the sto&k( (Hint: Calculate the respectiveyear’s Total Percent Return first before you calculate the AM and GM)

Pa g e 1 | 3


2/3


INVESTMENTS (IV)CFA Exam evie! b" #c!eser

Chapter 1 – age !8$ %uestion "

9s Yamisaka has determined that the average monthly return of another 9ega &lient was

1.#" during the past year. 7hat is the annuali:ed rate of return(

#ort Ans!er Questions

1. ;ifferentiate between gambling investing and trading (Read the articles !The "ifferencebet#een $nvestin% and Tradin%& ' !$ an $nvestor* +ot a Trader& for ore info),

2. 7hat are some of the possible reasons that &an move a share pri&e to go up or down(>www.youtube.&om>wat&h(v?!okr%


3/3


INVESTMENTS (IV)Common nvestment *erminolo+ies

9at&h the following terms to the definitions that best des&ribe it.

(A) ,lue&cip #toc-s( ) *to&k market pri&es are rising or expe&ted

to rise

(,) #&Cip #toc-s( ) *to&ksE earnings that are stable regardless

of the state of the e&onomy

(C) ,i+ Cap #toc-s ( ) Auying of shares

(D) id Cap #toc-s( ) *to&ksE earnings that are expe&ted to grow

at an above+average rate relative to the market

(E) #mall Cap #toc-s( ) *to&k market pri&es are falling or expe&ted

to fall

(F) Fled+in+ #toc-s( ) *to&ks that tend to trade at a lower pri&e

relative to the fundamentals > intrinsi& value

(.) Penn" #toc-s( ) *to&ksE earnings that flu&tuate a&&ordingly

with the state of the e&onomy

(/) De%ensive #toc-s ( ) Chinese &ompanies listed on *F

() C"clical #toc-s( ) enerally referring to sto&k pri&es that are

less than 48.28

(0) Dividend #toc-s( ) Gemaining &ompanies within the top 60

in terms of market &ap after 9id Cap *to&ks

(1) 2alue #toc-s ( ) Gemaining bottom 2 of the &ompanies bymarket &ap after *mall Cap *to&ks

(3) .ro!t #toc-s ( ) *elling of shares

() ar-et Cap or

ar-et Capitali4ation( ) The top "8 largest market &ap sto&ks

(N) ,ull ar-et

( ) *to&ks of large well+established and

finan&ially sound &ompany that has operated

for many years. 'n lo&al &ontext it also refers

to the "8 *T' &omponent sto&ks.

(5) ,ear ar-et ( ) *to&ks that gives stable dividends

(P) 3on+ ( ) *hares outstanding H last traded pri&e

(Q) #ort ( ) The next 58 largest market &ap sto&ks

Pa g e 3 | 3

Download - Tutorial 1 - Investment Overview n Risk Return Concepts (Student)(2)

Top Related