RSK4804 Assignment 2 2025 (Answer Guide) - Due 30 August 2025

RSK4804 Assignment 2 2025 (Answer Guide) - Due 30 August 2025 Contents Question 1: Credit Default Swaps 2 (a) Why are credit default swaps (CDS) necessary? (2 marks) 2 (b) Why are some investors not in favour of credit default swaps? (2 marks) 2 (c) Case Analysis: Magong Rural Investments and Moepi Minerals Exploration (6 marks) 3 Question 2: Portfolio Risk and Credit Portfolio Beta 5 (a) Determine the expected return and standard deviation of the portfolio (8 marks) 5 (b) Explain the significance of a credit portfolio beta (1 mark) 7 Question 3: Infrastructure Development and Project Finance 8 (a) Identification of a Major Infrastructure Project (5 marks) 8 (b) Project-Specific Risks and Related Mitigants (10 marks) 8 (c) Socioeconomic Advantages of the Project (5 marks) 10 Question 4: Working Capital Management – Cash Conversion Cycle 11 1. Debtors Collection Period (DCP) 12 2. Inventory Conversion Period (ICP) 12 3. Operating Cycle (OC) 13 4. Cash Conversion Cycle (CCC) 13 5. Interpretation: Given Cash Conversion Cycle vs Industry 13 References 14