INV2601 ASSIGNMENT 3 2021

INV2601 ASSIGNMENT 3 2021

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Assignment 3

Question 1 of 30

1.0 Points
The annual holding period return of an investment that was held for four years is 5.74%. The
ending value of this investment was R1 000. Calculate the beginning value of the investment.

Answer:799.94

Workings

Since the annual holding period yield = 5.74%

Annual HPR = Annual holding period yield + 1

Annual HPR = 0.0574 + 1 = 1.0574
1
Since Annual HPR = HPRn
1
1.0574 = (HPR)4

Therefore, HPR = 1.05744

HPR = 1.250135892

Ending value
Since, HPR = Beginning value

1 000
1.250135892 = Beginning value

Beginning value (1.250135892) = 1 000
1 000
Beginning value = = 799.9130384
1.250135892

Refer Marx 2013: 7

Question 2 of 30

1.0 Points

Which of the following is not a purpose of market indices?

Answer: To predict past market movements.

Explanation