Individual assignment on investment and portfolio management

Instruction: this assignment consists of 14 questions and you are required to attempt all of them

1) List and explain different types of risks

2) Explain the difference between expost and exante return
3) The shares of shalom company has the following anticipated returns with associated probabilities

Return% Probability Required

-10 0.05 1. Calculate the expected return?
10 0.10 2. Calculate variance & standard deviation
20 0.20
25 0.25
30 0.20
25 0.15
30 0.05
4) A bond of birr.1000 bearing a coupon rate 12% is redeemable at par in 10 years. Find out the
value of the bond if:
i. Required rate of return is 12% or 10% or 14%
ii. Required rate of return is 12% and redeemable after 15years.
5) XYZ co. issued 20 year bonds a year ago at a coupon rate of 11.4%. The bonds make semiannual
payments. The yield to maturity on these bonds is 9.2% what is the current bond price?
6) For a straight bond pays semiannual with 10 years to maturity, a coupon rate of 8% and an YTM
of 10%, what is the current price?
7) ABC Company, , from 1998 through 2003 paid the following per-share dividends:
Year 2006 2007 2008 2009 2010
Dividends 2.50 2.80 3.00 3.20 3.50
The required return, cost of capital, is assumed to be 10%.
Based on the above given data, what is the price of the share?

8) A company is paying an annual dividend of birr40 per share. The company is expected not to
deviate from this dividend amount in the future. Current discount rate is 15%.Calculate the
present value of the share?
9) ABC limited is expected to pay dividend of birr 40 per share.. The dividends are expected to grow
at a rate of 10%. The capitalization rate is 15%. Find the value of share?
10) A firm is paying a dividend of birr. 1.50 per share. The rate of dividend is expected to grow at
10% for next 3 years and 5% thereafter infinitely. Find out the value of the share given that the
required rate of return of the investor is 15%.
11) Explain in detail the difference between Fundamental analysis and Technical analysis
12) List and describe money market securities and capital market securities
13) Graphically explain the association between price of bond and corresponding maturity
14) Graphically explain the association between price of bond and discount rate