Financial Math Answers

In January 2013, a country’s government issued an index-linked bond with a 2-year term. Coupons were payable half-yearly in arrears, at a rate of 3% per annum. Interest and capital payments were indexed-linked by reference to the value of an inflation index with a time lag of 6 months.
An investor purchased £100,000 nominal at issue and held it to redemption and was not subject to any tax. The issue price was 96%.
The inflation index was as follows:
Date - Inflation Index
July 2012 - 111.5
January 2013 - 113.1
July 2013 - 116.7
January 2014 - 120.1
July 2014 - 124.2
(a) Calculate the investor’s cash flows from this investment, showing the month in which, each cash flow occurs. (4 marks)
(b) Calculate the investor’s effective yield per annum, to closest 1%. (3 marks)
(Total 7 marks)

A loan stock is issued on 1st January 2014 with coupons at 9% per annum payable quarterly in arrears. The loan stock is repayable on either the 10th or 12th anniversary of issue at 115%, at the option of the borrower.
(a) Calculate the issue price per £100 nominal which would provide the purchaser subject to 25% tax on income with a net effective yield of at least 6% per annum. (5 marks)
(b) Using the assumptions as in (a) above, calculate the ex-dividend price 2 months after the issue date. (3 marks)
(Total 8 marks)

An investor has decided to purchase a fixed interest bond at issue which offers coupons of 5% per annum, payable half-yearly. The bond will be redeemed at 110% in 10 years’ time.
The investor pays income tax at 30% and capital gains tax at 20%.

Calculate the price per £100 nominal if the investor is to obtain a yield of 6% per annum. (Total 6 marks)

marys gross income was 72000 and took a standard exeption of 12000 as well as claiming two dependents at an exeption amount of 4000each. what is marys taxable income?

A company issues 2,000,000 ordinary shares at a purchase price of 55p each to an investor.
No dividend is expected to be paid for 3 years. The first dividend payable in 3 years’ time is expected to be 6p per share, and dividends are expected to be paid every 6 months thereafter in perpetuity. The two dividend payments in each year are expected to be the same, but dividends are expected to increase at the end of each year, at a rate of 4% per annum compound.

Assuming that the investor pays income tax at 30%, calculate the net present value of the investment at an effective rate of interest of 7% per annum. (Total 6 marks)

Parents wish to have $130,000 available for a child’s education. If the child is now 5 years old, how much money must be set aside at 3% compounded semiannually to meet their financial goal when the child is 18 ?

5,100 dollars invested for 10 years at 9 percent compounded annually is?

Steve has deposited $50,000 into an account earning 6% compounded quarterly. After 5 years, he transfers the money in his account into a RRIF earning 4.5% compounded monthly, and makes beginning-of the month withdrawals of $2000. How long can Steve make these withdrawals?

Let ( , ) ρ = w1 w2
be a portfolio of two securities. Find the value of w1
and w2
in the following
situations:
i) 1 ρ12 = − and ρ is risk-free.
ii) σ1 = σ2
and variance P is minimum.
iii) Variance on P is minimum and 2 ,5.0 ρ12 = − σ1 = and 3 σ2 = .

You have been requested by the shareholders to prepare a detailed report analysing the financial performance and financial position of COPPERBELT ENERGY CORPORATION PLC for the year ended 31st December 2018.

The Annual Report and Accounts for Copperbelt Energy Corporation Plc are on the website(https://cecinvestor.com/cec-2018-annual-report-erratum/).

REQUIRED:


a) Explain in detail what the company owns and what it owes as at 31st December 2018
(15 marks)
b) Explain in detail the changes in what the company owns and what it owes between 31st December 2017 and 31st December 2018 ( 15 marks)
c) Explain why Total equity has reduced from US$343.5m in 2017 to US $373.4m in 2018.
(6 marks)
d) Explain why cash and cash equivalents have increased from US$68.1m in 2017 to US$86.7m in 2018. (10 marks)