FIN2601
Assignment 1
(792539)
DUE: 16 APRIL 2026
, UNIVERSITY OF SOUTH AFRICA
FIN2601 – MANAGERIAL FINANCE
ASSIGNMENT 01 – WRITTEN ASSESSMENT
Due Date: 16 April 2026
Unique Number: 792539
Total Marks: 30
Prescribed Textbook: Principles of Managerial Finance, 13th Edition
Gitman, L.J. & Zutter, C.J. (2012) – Chapters 1, 6 & 8
, QUESTION 1 [18 marks]
Transportation Hero is a diversified logistics and transportation holding company with a total capital
investment of R500 million across five subsidiaries, each exposed to different levels of systematic risk
measured by beta coefficients.
1.1 Expected Return of the Market Portfolio [6 marks]
Formula: E(rm) = Σ [Probability × Market Return]
Probability (p) Market Return (km) p × km Working
0.10 10% 1.00% 0.10 × 10 = 1.00
0.20 12% 2.40% 0.20 × 12 = 2.40
0.40 13% 5.20% 0.40 × 13 = 5.20
0.20 16% 3.20% 0.20 × 16 = 3.20
0.10 17% 1.70% 0.10 × 17 = 1.70
Total 13.50% E(rm) = 13.50%
∴ E(rm) = 0.10(10%) + 0.20(12%) + 0.40(13%) + 0.20(16%) + 0.10(17%) = 13.50%
1.2 Beta Coefficient of the Portfolio [10 marks]
The portfolio beta is the weighted average of individual subsidiary betas, where weights are determined by
each subsidiary's proportion of total investment.
Formula: βp = Σ (wi × βi) where wi = Investment i / Total Investment
Investment Weight
Subsidiary Working Beta (βi) wi × βi
(Rm) (wi)
Freight & cargo services 160 0.32 160/500 0.5 0.1600
Warehousing & distribution 120 0.24 120/500 2.0 0.4800
Courier & last-mile delivery 80 0.16 80/500 4.0 0.6400
Fleet management & vehicle
80 0.16 80/500 1.0 0.1600
leasing
Customs clearing & frt
60 0.12 60/500 3.0 0.3600
forwarding
TOTAL 500 1.00 1.80
Assignment 1
(792539)
DUE: 16 APRIL 2026
, UNIVERSITY OF SOUTH AFRICA
FIN2601 – MANAGERIAL FINANCE
ASSIGNMENT 01 – WRITTEN ASSESSMENT
Due Date: 16 April 2026
Unique Number: 792539
Total Marks: 30
Prescribed Textbook: Principles of Managerial Finance, 13th Edition
Gitman, L.J. & Zutter, C.J. (2012) – Chapters 1, 6 & 8
, QUESTION 1 [18 marks]
Transportation Hero is a diversified logistics and transportation holding company with a total capital
investment of R500 million across five subsidiaries, each exposed to different levels of systematic risk
measured by beta coefficients.
1.1 Expected Return of the Market Portfolio [6 marks]
Formula: E(rm) = Σ [Probability × Market Return]
Probability (p) Market Return (km) p × km Working
0.10 10% 1.00% 0.10 × 10 = 1.00
0.20 12% 2.40% 0.20 × 12 = 2.40
0.40 13% 5.20% 0.40 × 13 = 5.20
0.20 16% 3.20% 0.20 × 16 = 3.20
0.10 17% 1.70% 0.10 × 17 = 1.70
Total 13.50% E(rm) = 13.50%
∴ E(rm) = 0.10(10%) + 0.20(12%) + 0.40(13%) + 0.20(16%) + 0.10(17%) = 13.50%
1.2 Beta Coefficient of the Portfolio [10 marks]
The portfolio beta is the weighted average of individual subsidiary betas, where weights are determined by
each subsidiary's proportion of total investment.
Formula: βp = Σ (wi × βi) where wi = Investment i / Total Investment
Investment Weight
Subsidiary Working Beta (βi) wi × βi
(Rm) (wi)
Freight & cargo services 160 0.32 160/500 0.5 0.1600
Warehousing & distribution 120 0.24 120/500 2.0 0.4800
Courier & last-mile delivery 80 0.16 80/500 4.0 0.6400
Fleet management & vehicle
80 0.16 80/500 1.0 0.1600
leasing
Customs clearing & frt
60 0.12 60/500 3.0 0.3600
forwarding
TOTAL 500 1.00 1.80
