lOMoAR cPSD| 49511909
1
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, lOMoAR cPSD| 49511909
MARKING SCHEME PROVIDED IN THIS DOCUMENT
1. 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.
1. R799.94
2. R945.72
3. R1 057.40
4. R1 250.00
2. Which of the following is not a purpose of market indices?
1. To predict past market movements.
2. To create and monitor an index fund.
3. To measure market rates of return in economic studies.
4. As benchmarks to evaluate the performance of professional
portfolio managers.
3. If a risk-free asset has a correlation of zero with all other risky
assets the expected return will be .......... to/than the actual
return.
1. lower
2
Open Rubric
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, lOMoAR cPSD| 49511909
2. equal
3. greater
4. not related
4. .....(i)..... risk is the only risk that a share contributes to a well
diversified portfolio while .....(ii)..... risk is diversified away
from this portfolio.
(i) (ii)
1. Financial unsystematic
2. Systematic financial
3. Systematic unsystematic
4. systematic
Unsystematic
Use the information in the table below to answer question
5.
Average rate Standard Correlation
of return deviation coefficient with
market index
Green 26% 14% 0.45
Limited
Market 10% 6%
Index
3
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, lOMoAR cPSD| 49511909
5. Calculate the beta of Green Limited.
1. 0.01
2. 0.06
3. 0.55
4. 1.06
6. Brainchild Limited has a current dividend of R2.00 per share.
It has a beta of 1.1 and a constant growth rate of 5%. The risk-
free rate is 8% and the return of the market is 12%. Calculate
the intrinsic value of Brainchild Limited using the constant
growth model.
1.
R27.03
2.
R28.38
3.
R28.57
4. R30.00
7. Maroon Limited has just paid dividends of R1.00 per share
this year. The dividend is expected to grow at 15% over the
next two years and at 8% in year three. There after growth is
4
Downloaded by Vincent master ()
1
Downloaded by Vincent master
()
, lOMoAR cPSD| 49511909
MARKING SCHEME PROVIDED IN THIS DOCUMENT
1. 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.
1. R799.94
2. R945.72
3. R1 057.40
4. R1 250.00
2. Which of the following is not a purpose of market indices?
1. To predict past market movements.
2. To create and monitor an index fund.
3. To measure market rates of return in economic studies.
4. As benchmarks to evaluate the performance of professional
portfolio managers.
3. If a risk-free asset has a correlation of zero with all other risky
assets the expected return will be .......... to/than the actual
return.
1. lower
2
Open Rubric
Downloaded by Vincent master ()
, lOMoAR cPSD| 49511909
2. equal
3. greater
4. not related
4. .....(i)..... risk is the only risk that a share contributes to a well
diversified portfolio while .....(ii)..... risk is diversified away
from this portfolio.
(i) (ii)
1. Financial unsystematic
2. Systematic financial
3. Systematic unsystematic
4. systematic
Unsystematic
Use the information in the table below to answer question
5.
Average rate Standard Correlation
of return deviation coefficient with
market index
Green 26% 14% 0.45
Limited
Market 10% 6%
Index
3
Downloaded by Vincent master
()
, lOMoAR cPSD| 49511909
5. Calculate the beta of Green Limited.
1. 0.01
2. 0.06
3. 0.55
4. 1.06
6. Brainchild Limited has a current dividend of R2.00 per share.
It has a beta of 1.1 and a constant growth rate of 5%. The risk-
free rate is 8% and the return of the market is 12%. Calculate
the intrinsic value of Brainchild Limited using the constant
growth model.
1.
R27.03
2.
R28.38
3.
R28.57
4. R30.00
7. Maroon Limited has just paid dividends of R1.00 per share
this year. The dividend is expected to grow at 15% over the
next two years and at 8% in year three. There after growth is
4
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