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Fin2601 Assignment 2 Semester 2 2022
- Institution
- University Of South Africa (Unisa)
Fin2601 Assignment 2 for semester 2 of 2022. All calculations have been included to aid revision.
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FIN2601 ASSIGNMENT 2SEMESTER 2 2022
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Question 1
State of Pri Ri R Ri – R (Ri − r)2
Economy Pri (Ri − r)2
Strong 0.30 32 10.60 21.40 457.96 137.388
Normal 0.40 10 10.60 0.60 0.36 0.1440
Weak 0.30 -16% 10.60 -26.60 707.56 212.268
Total 349.80
R = ∑ Pri x Ri = (0.30 x 32) + (0.40 x 10) + (0.30 x -16) = 10.60
Standard deviation = √Variance = √349.80 = 18.70%
Option 2
Question 2
Expected return Security A = (0.3 x 30) + (0.4 x 25) + (0.30 x 20) = 25%
Expected return Security B = (0.20 x 50) + (0.60 x 30) + (0.2 x 10) = 30%
Expected return of the portfolio made up of 60% security A and 40% Security B
Portfolio return = (0.60 x 25) + (0.40 x 30) = 27%
Option 1
Question 3
(Ending value−Beginning value)+Income ((1 700 000−1 500 000)+40 000
Holding period return = =
Beginning value 1 500 000
Return = 16%
Option 2
Question 4
Standard deviation
Coefficient of variance = Expected return
21+(−12.5)+25
Expected return = = 11.17
3
(𝑟𝑖−𝑟)2
Standard deviation = √∑ 𝑛−1
(21−11.17)2 +(−12.5−11.17)2 +(25−11.17)2
Standard deviation = √ = 20.59%
3−1
20.59
Therefore, CV = 11.17 = 1.84
Option 2
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