1. Calculate the future sums of the following two schemes. Each makes contributions of $400 per month over 40 years. One is invested in a balanced portfolio that earned on average 7.2% per annum (after fees) and the other is invested in a growth portfolio earned on average 10% (after fees) per annum.
2. Suppose a bank accepted a company's 90-day bills with a face value of $50 million and charged fees of 120bps. Given the bills were issued at 5%, calculate (i) the borrower's proceeds and (ii) the dollar amount of the bank's acceptance fee.
3. Calculate the change in price for a 90-day bill with a face value of $10 million over a 20-day period if the market yield remained at 3.6% p.a. What is measured by the change in the bill's price?
4. Calculate the holding-period yield from an investment in a 90-day bill with a face value of $50 million purchased at 4% and sold 30 days later at 4.2%.
5. Calculate the settlement prices for the 5.75% 15 July 2022 Treasury bond on 15 July 2015 if the yields were (a) 4.50%, (b) 5.75% and (c) 6.25%.
6. Calculate the settlement price on 1 August 2015 of the 5.5% 21 April 2023 bond assuming it was traded at 5.6%. Note that f is 81 days (30 left in August, 30 in September, 21 in October) and d is 183 days (9 left in April, 31 in May, 30 in June, 31 in July, 31 in August, 30 in September and 21 in October).
7. NAB's annual dividend has grown from $1.12 in 1999 to $1.90 in 2013
a. Estimate the annual dividend growth rate over this period.
b. Assuming dividends continue to grow at this rate, use Gordon's model to value NAB shares just after the 2013 dividend was paid given a required rate of return of 9% p
8. Estimate RIO's required rate of return if the current risk-free rate of interest is 2.75% p.a., the expected market return is 13% p.a. and RIO's beta is 1.45.