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Exam (elaborations) FIN2601 - Financial Management (FIN2601) $3.09   Add to cart

Exam (elaborations)

Exam (elaborations) FIN2601 - Financial Management (FIN2601)

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This document consists of past assignment answers from , it also consists of a latest mock exam(2022).

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  • June 28, 2022
  • 219
  • 2021/2022
  • Exam (elaborations)
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FIN2601 Self-assessment Session 2




Part 1: Study unit 4: Risk and return




Textiles Corporation purchased a printing machine one year ago for R15 000.
During the year it generated R8 000 in cash flow. If Textiles sells the machine, it
could receive R10 000 for it. What will Textiles's return on the machine be?



A.
55%


B.
87%


C.
40%


D.
20%



Answer Point Value: 1.0 points
Answer Key: D

,Which of the following investments would be considered best, based on its/their
risk-and-return relationship? Assume all investors are risk-averse and the
investments will be held in isolation, not in a portfolio.


INVESTMENTS


D E F


Expected return, 10,0% 18,0% 10,0%


Standard deviation,
7,0% 12,0% 20,0%




A.
F, because its standard deviation is highest.


B.
E, because its coefficient of variation is lowest.


C.
D, because its total risk is lowest.


D.
D and F, because they have the same expected return.



Answer Point Value: 1.0 points
Answer Key: B

,The return of Nokia share has a standard deviation of 1,5% and a coefficient of
variation of 0,08. The risk-free rate of return is 11%. The beta coefficient of the
share is 1,5 and the market rate of return is 16%. Calculate the required rate of
return?


A.
13,2%


B.
20,0%


C.
16,3%


D.
18,5%



Answer Point Value: 1.0 points
Answer Key: D

, Part 2: Study unit 3: Time value of money




Jane wants to set aside funds to take a round-the-world cruise in four years' time.
Assuming that Jane has R375 000 to invest today in an account which is expected
to earn 8% interest compounded quarterly, how much will she have to spend on
her vacation in four years’ time?


A.
R510 183,36


B.
R260 055,16


C.
R514 794,64


D.
R273 167,18



Answer Point Value: 1.0 points
Answer Key: C

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