100%
INV4801
EXAM PACK
DISTINCTION QUALITY
UNISA EXAM
,UNIVERSITY EXAMINATIONS
January/ February 2025
INV4801
Portfolio Management
100 Marks
Duration: 3 Hours
This paper consists of 21 pages in total.
This is a fill-in examination paper, and the questions must be answered in the designated
areas of the paper. If you cannot type in your answers in the space provided, you can
write/type on separate answer sheets/ word document and the questions must be clearly
numbered. You are also allowed to print the exam paper and then complete it.
Please note:
1 You are provided here, with an online timed exam of evidence designed to evaluate
your competence in the Portfolio Management module (INV4801).
2 It is therefore important that your presentation is original or that it is presented in
your own words, in the spaces allocated to you. Make sure that your presentation is
done by you, in your own words and is brief as required.
3 This assessment is conducted online. You are therefore required to complete and
upload it online on or before the deadline time.
4 Students must answer all the four questions.
5 The questions may look similar to previous assignments or other exams, but they
are fundamentally different though they still examine similar learning outcomes
(LOS).
The Non-Venue Format is a Take-home Timed Exam with submission on the Assessment
Info Tool on https://cems.myexams.unisa.ac.za/
Please read the next page for the Invigilator App information
, CONFIDENTIAL INV4801 January/ February 2025
Page 2 of 20
Question 1 [25 marks]
Rebecca and Peter Jonah, both aged 54, are residents of U.S. They have twin sons who will enter a four-year
-time employee of a telecommunications company. Peter
is a self-employed sales consultant.
high-income
to their total expenses; as a result, they cannot add to savings currently. They expect that both their expenses
and income will grow at the inflation rate. All medical costs, now and in the future, are fully covered through
government programs.
The Jonahs worry about whether they have saved enough for retirement, and whether they will be able to
maintain the real value of their portfolio. Inflation is expected to average 5% for the foreseeable future.
The Jonahs have approached Joseph David to help them analyze their investment strategy and retirement
choices. The Jonahs disagree about the appropriate investment strategy. Rebecca prefers not losing money
over making a high return. This is partly a result of continued regret for a loss experienced in an equity mutual
She thinks Peter focused only on potential return and paid little attention to risk.
The Jonahs currently have all their assets in inflation-indexed, short-term bonds that are expected to continue
to earn a return that would match the inflation rate after taxes. After retirement, they are willing to consider
changing their investment strategy if necessary to maintain their lifestyle.
The Jonahs are eligible to retire next year at age 55. If they do, Rebecca will receive annual payments from
-benefit pension plan and both Rebecca and Peter will receive payments from the U.S.
government pension plan. Peter does not participate in any company or individual retirement plan. David has
heir retirement date next
year.
Exhibit 1
Financial Data and Market Expectations
Rebecca and Peter Jonah
Retirement at Age 55
(2026)
Expected annual expenses $ 165,000
Annual pension income (after-tax)
$ 50,000
Combined government pension $ 50,000
Expected annual inflation 5.0%
Expected annual after-tax portfolio return 4.0%
The Jonahs expect to earn no employment income
part of their investable assets.
The Jonahs have the option to delay retirement until age 60. The Jonahs intend to retire together, whether it
is in 2026 at age 55 or in 2031 at age 60.
David determines that if the Jonahs retire at age 55, their risk tolerance is below average. If they retire at age
55, they plan to pay off their mortgage and pay associated taxes by withdrawing $ 900,000 from their portfolio.
[TURN OVER]
, CONFIDENTIAL INV4801 January/ February 2025
Page 3 of 20
Another consideration for the Jonahs relates to funding university expenses for their sons. If the Jonahs retire
cover all university costs.
If the Jonahs retire at age 60, their combined pension income would increase and would almost meet their
annual spending needs. The Jonahs would though have to pay all university expenses from their investment
portfolio through an arrangement with the university. The arrangement, covering both sons, would require the
Jonahs to make a single payment of $ 200,000 at age 55.
REQUIRED:
a)
retire at age 55. No calculations are required. (4)
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
[TURN OVER]
INV4801
EXAM PACK
DISTINCTION QUALITY
UNISA EXAM
,UNIVERSITY EXAMINATIONS
January/ February 2025
INV4801
Portfolio Management
100 Marks
Duration: 3 Hours
This paper consists of 21 pages in total.
This is a fill-in examination paper, and the questions must be answered in the designated
areas of the paper. If you cannot type in your answers in the space provided, you can
write/type on separate answer sheets/ word document and the questions must be clearly
numbered. You are also allowed to print the exam paper and then complete it.
Please note:
1 You are provided here, with an online timed exam of evidence designed to evaluate
your competence in the Portfolio Management module (INV4801).
2 It is therefore important that your presentation is original or that it is presented in
your own words, in the spaces allocated to you. Make sure that your presentation is
done by you, in your own words and is brief as required.
3 This assessment is conducted online. You are therefore required to complete and
upload it online on or before the deadline time.
4 Students must answer all the four questions.
5 The questions may look similar to previous assignments or other exams, but they
are fundamentally different though they still examine similar learning outcomes
(LOS).
The Non-Venue Format is a Take-home Timed Exam with submission on the Assessment
Info Tool on https://cems.myexams.unisa.ac.za/
Please read the next page for the Invigilator App information
, CONFIDENTIAL INV4801 January/ February 2025
Page 2 of 20
Question 1 [25 marks]
Rebecca and Peter Jonah, both aged 54, are residents of U.S. They have twin sons who will enter a four-year
-time employee of a telecommunications company. Peter
is a self-employed sales consultant.
high-income
to their total expenses; as a result, they cannot add to savings currently. They expect that both their expenses
and income will grow at the inflation rate. All medical costs, now and in the future, are fully covered through
government programs.
The Jonahs worry about whether they have saved enough for retirement, and whether they will be able to
maintain the real value of their portfolio. Inflation is expected to average 5% for the foreseeable future.
The Jonahs have approached Joseph David to help them analyze their investment strategy and retirement
choices. The Jonahs disagree about the appropriate investment strategy. Rebecca prefers not losing money
over making a high return. This is partly a result of continued regret for a loss experienced in an equity mutual
She thinks Peter focused only on potential return and paid little attention to risk.
The Jonahs currently have all their assets in inflation-indexed, short-term bonds that are expected to continue
to earn a return that would match the inflation rate after taxes. After retirement, they are willing to consider
changing their investment strategy if necessary to maintain their lifestyle.
The Jonahs are eligible to retire next year at age 55. If they do, Rebecca will receive annual payments from
-benefit pension plan and both Rebecca and Peter will receive payments from the U.S.
government pension plan. Peter does not participate in any company or individual retirement plan. David has
heir retirement date next
year.
Exhibit 1
Financial Data and Market Expectations
Rebecca and Peter Jonah
Retirement at Age 55
(2026)
Expected annual expenses $ 165,000
Annual pension income (after-tax)
$ 50,000
Combined government pension $ 50,000
Expected annual inflation 5.0%
Expected annual after-tax portfolio return 4.0%
The Jonahs expect to earn no employment income
part of their investable assets.
The Jonahs have the option to delay retirement until age 60. The Jonahs intend to retire together, whether it
is in 2026 at age 55 or in 2031 at age 60.
David determines that if the Jonahs retire at age 55, their risk tolerance is below average. If they retire at age
55, they plan to pay off their mortgage and pay associated taxes by withdrawing $ 900,000 from their portfolio.
[TURN OVER]
, CONFIDENTIAL INV4801 January/ February 2025
Page 3 of 20
Another consideration for the Jonahs relates to funding university expenses for their sons. If the Jonahs retire
cover all university costs.
If the Jonahs retire at age 60, their combined pension income would increase and would almost meet their
annual spending needs. The Jonahs would though have to pay all university expenses from their investment
portfolio through an arrangement with the university. The arrangement, covering both sons, would require the
Jonahs to make a single payment of $ 200,000 at age 55.
REQUIRED:
a)
retire at age 55. No calculations are required. (4)
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
........................................................................................................................................................................
[TURN OVER]
