Finance Answers

Why do investors prefer to invest in ordinary shares as opposed to fixed bonds? 10marks

What the difference between the active portfolio and passive portfolio? 4marks

Which bond will sale higher between a callable bond and a non callable bond given they have same coupon rate? 4marks

Give reasons that led to the introduction of the basel 1,2 and 3?

What does the product 𝐿12×𝑖12 represent?

a.

Nothing. This expression is complete nonsense.

b.

the interest component of the 13𝑡ℎ payment

c.

The interest paid in the second year.

d.

the interest component of the 12𝑡ℎ payment

What does the difference 𝐿0−𝐿12 represent?

a.

The interest paid in the first year of the loan.

b.

The principal repaid in the first year of the loan.

c.

The principal repaid in the first 12 years of the loan.

d.

None of the other choices are correct

The last payment for the loan occurs on 1 July 2044. For the next question, we will refer to 2044 as the "final year". Type in the "final year" below (i.e. if the last payment occurs in 2031, type in 2031).

Calculate the equivalent effective monthly rate. Give your answer as a percentage to 4 decimal places, and do NOT include a percentage sign

The interest rate for the loan is 5.6% p.a. effective. Calcualte the equivalent nominal annual rate compounding monthly. Give your answer as a percentage to 4 decimal places, and do NOT include a percentage sign.

The interest rate for the loan is an effective annual rate. Which of the following is the best next step before trying to calculate the required monthly repayment for the mortgage?

a.

Divide the rate by 12 to work in months

b.

Convert the rate to a nominal annual rate compounding monthly, and use this new rate directly to calculate the monthly repayments.

c.

No interest rate conversion is needed. The rate can be used directly.

d.

Convert the rate to an effective monthly rate, and use this rate directly to calculate the monthly repayments.