INV4801
EXAM PACK
FOR ASSISTANCE WITH THIS MODULE +27 67 171 1739
, UNIVERSITY EXAMINATIONS
UNISA len
January/ February 2025
INV4801
Portfolio Management
100 Marks
Duration: 3 Hours
This paper consists of21 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:/icems.myexams.unisa.ac.Za/
Please read the next page for the Invigilator App information
Open Rubric
,ed INV4801
Date: 30 January 2025
INSTRUCTIONS ON THE DAY OF ASSESSMENT:
Ensure you are connected to the internet in order to log into the Invigilator App and YOUR EXAM QR CODE & EXAM
scan this QR code. ACCESS CODE
If you encounter difficulty in scanning the QR code, you can alternatively enter the
Exam Access Code below the QR code to start the invigilation.
If you finish your assessment before the app timer has run out you need to press the
‘Finish Assessment’ button and follow instructions before you exit or minimise the app.
Scan the QR code at the start time of the assessment, unless otherwise specified by
your institution, note that you can only scan this QR code once.
The Invigilator App may request you to take photos of your examination script after the
assessment. Please follow the instructions on the app and take note that your
oo ; , ; ; Exam Access Code: 8b3373cc
academic institution may still require you to submit your script on the relevant portal.
The QR code Is only scannable for a Ilmlted tlme and It should therefore be
scanned as soon as possible after the assessment commencement time.
Keep the Invigilator App open on your smartphone for the full duration of the assessment. You are not allowed to minimise or leave the
app during your assessment.
You must adhere to the assessment time limit communicated to you by your institution. The timer displayed in the Invigilator may vary
depending on the start time of invigilation.
FURTHER GUIDANCE
If you only have one device you may access your assessment in the application by pressing the ‘Access Browser’ button in the top right
corner of your app.
Once the QR code is scanned, ensure your media volume is turned up and place your smartphone next to you.
The Invigilator App will notify you with a notification beep when you are required to action a photo request, which you should then
perform as soon as possible.
We recommend that you keep your smartphone on charge for the duration of the assessment.
Ensure you are connected to the internet when commencing invigilation. You also need to be connected to the internet at the end of the
assessment in order to upload the app data.
If your assessment has multiple online sections, tests or attempts, you should NOT finish the invigilation until your entire assessment
has been completed.
Should you encounter any technical difficulty, please WhatsApp The Invigilator Helpdesk on +27 (0)73 505 8273
, 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
university program in a year’s time. Rebecca is a long-time employee of a telecommunications company. Peter
is a self-employed sales consultant.
Peter's annual income is now steady after years of extreme highs and lows. The Jonahs have built an
investment portfolio through saving in Peter’s high-income years. The Jonahs’ current annual income is equal
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
fund several years ago. Peter's history of making frequent changes in their portfolio greatly annoyed Rebecca.
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
her company’s defined-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
compiled financial data and market expectations for the Jonahs’ retirement, shown in Exhibit 1. Currently,
David estimates that the Jonahs’ investment portfolio will grow to $2,200,000 by their 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)
Rebecca’s company plan $ 50,000
Combined government pension $ 50,000
Expected annual inflation 5.0%
Expected annual after-tax portfolio return 4.0%
Pension income from both Rebecca’s company plan and the government pension plan is fully indexed for
inflation. David expects a tax rate of 20% to apply to the Jonahs’ withdrawals from the investment account.
The Jonahs expect to earn no employment income after retirement. The Jonahs’ residence is not considered
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]
EXAM PACK
FOR ASSISTANCE WITH THIS MODULE +27 67 171 1739
, UNIVERSITY EXAMINATIONS
UNISA len
January/ February 2025
INV4801
Portfolio Management
100 Marks
Duration: 3 Hours
This paper consists of21 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:/icems.myexams.unisa.ac.Za/
Please read the next page for the Invigilator App information
Open Rubric
,ed INV4801
Date: 30 January 2025
INSTRUCTIONS ON THE DAY OF ASSESSMENT:
Ensure you are connected to the internet in order to log into the Invigilator App and YOUR EXAM QR CODE & EXAM
scan this QR code. ACCESS CODE
If you encounter difficulty in scanning the QR code, you can alternatively enter the
Exam Access Code below the QR code to start the invigilation.
If you finish your assessment before the app timer has run out you need to press the
‘Finish Assessment’ button and follow instructions before you exit or minimise the app.
Scan the QR code at the start time of the assessment, unless otherwise specified by
your institution, note that you can only scan this QR code once.
The Invigilator App may request you to take photos of your examination script after the
assessment. Please follow the instructions on the app and take note that your
oo ; , ; ; Exam Access Code: 8b3373cc
academic institution may still require you to submit your script on the relevant portal.
The QR code Is only scannable for a Ilmlted tlme and It should therefore be
scanned as soon as possible after the assessment commencement time.
Keep the Invigilator App open on your smartphone for the full duration of the assessment. You are not allowed to minimise or leave the
app during your assessment.
You must adhere to the assessment time limit communicated to you by your institution. The timer displayed in the Invigilator may vary
depending on the start time of invigilation.
FURTHER GUIDANCE
If you only have one device you may access your assessment in the application by pressing the ‘Access Browser’ button in the top right
corner of your app.
Once the QR code is scanned, ensure your media volume is turned up and place your smartphone next to you.
The Invigilator App will notify you with a notification beep when you are required to action a photo request, which you should then
perform as soon as possible.
We recommend that you keep your smartphone on charge for the duration of the assessment.
Ensure you are connected to the internet when commencing invigilation. You also need to be connected to the internet at the end of the
assessment in order to upload the app data.
If your assessment has multiple online sections, tests or attempts, you should NOT finish the invigilation until your entire assessment
has been completed.
Should you encounter any technical difficulty, please WhatsApp The Invigilator Helpdesk on +27 (0)73 505 8273
, 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
university program in a year’s time. Rebecca is a long-time employee of a telecommunications company. Peter
is a self-employed sales consultant.
Peter's annual income is now steady after years of extreme highs and lows. The Jonahs have built an
investment portfolio through saving in Peter’s high-income years. The Jonahs’ current annual income is equal
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
fund several years ago. Peter's history of making frequent changes in their portfolio greatly annoyed Rebecca.
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
her company’s defined-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
compiled financial data and market expectations for the Jonahs’ retirement, shown in Exhibit 1. Currently,
David estimates that the Jonahs’ investment portfolio will grow to $2,200,000 by their 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)
Rebecca’s company plan $ 50,000
Combined government pension $ 50,000
Expected annual inflation 5.0%
Expected annual after-tax portfolio return 4.0%
Pension income from both Rebecca’s company plan and the government pension plan is fully indexed for
inflation. David expects a tax rate of 20% to apply to the Jonahs’ withdrawals from the investment account.
The Jonahs expect to earn no employment income after retirement. The Jonahs’ residence is not considered
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]
