Holding Period Return - Ringgit Malaysia - Vickneswaran Case Study - Accounting and Finance Assignment Help

Assignment Task:

QUESTION 1
  
a)Define the holding period return.                                                                                      
 
b)Last year Encore bought 1000 shares of Dinas Corporation common stock for RM56 per share. During the year he received dividends of RM1.55 per share. The stock is currently selling for RM65 per share. Compute 
 
i) Capital gain in Ringgit Malaysia.                                                      

ii) Income in Ringgit Malaysia.                                                                    

iii) Percentage return Encore earns over the year from this investment. 
         
QUESTION 2
 
a)Vickneswaran has a portfolio of three assets. Find the expected rate of return for the portfolio assuming he invests 30 percent of its money in asset A with a 15 percent rate of return, 25 percent in asset B with a rate of return of 25 percent, and the rest in asset C with 35 percent rate of return.                                                                         
 
b)Estimate the value of Ariana antique stock. Ariana Antiques has a beta of 1.25, the annual risk-free rate of interest is currently 7 percent, and the market risk premium is 9 percent. The firm estimates that its future dividends will continue to increase at an annual compound rate consistent with that experienced over the 2015-2018 period.  

QUESTION 3 
 
Identify which asset would the risk-averse financial manager prefer based on expected return, variance, and standard deviation measure

QUESTION 4 
 
a)Using the formula, explain briefly the determinants of the present value of cash flow. 
 
b)Congratulation! Your wife just delivered a son today. As a father, you decide you want your child to be a millionaire.  You deposit RM86,950 in an investment account that earns 8% per year. The money in the account will be distributed to your son whenever the total reaches RM1,888,888. How old will your son be when he gets the money (rounded to the nearest year)?                                                                                                                         
 
c)Compute the rate that must be compounded annually for RM4,500 to grow to RM6,500 in 5 years.                                                                                                                           
d)Compute the present value of RM15,000 to be received 15 years from today. Assume a discount rate of 5.5% compounded annually and round to the nearest RM1.             
e)Two sisters each open fixed deposit in 2019 and plan to invest RM3,000 per year for the next 30 years. Jannah makes her first deposit on Jan 1, 2019, and will make all future deposits on the first day of the year. Jane makes her first deposit on Jan 31, 2019, and will continue to make her annual deposits on the last day of each year. At the end of 30 years, the difference in the value of the fixed deposits (rounded to the nearest dollar), assuming an interest rate of 
7% per year.                                                                                                              
 
f)Yee Chin Hoe borrowed RM50,000 today that he must repay in 10 annual end-of-year installments with 4% annual interest rate. Compute how much Yee Chin Hoe will be paying on his installment on this loan.                                                                                 
 
g)One bank offers you 4% interest compounded semiannually. Compute the equivalent rate would be if interest were compounded quarterly.    

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