Need help with my Finance question – I’m studying for my class.

VID: https://youtu.be/BPJ2UW13CCg

Discussion 2: (3 points) (Hello, I would like you to discuss the topic I listed above and answer the questions asked)

The CEO of “The Family Office” is talking about the role of wealth management in risk planning; he first distinguished between speculation and investing and briefly explained that our investment strategies must be written in order to follow a certain plan to accomplish the goal of our investments. But the CEO mentioned that he would not recommend for investors to borrow funds from banks and use them in investing. He called this “The biggest mistake.”

• As an investor, do you agree with the CEO? Why?
• Suppose you are interested in a high rate of returns, but you know with high returns, there are high risks. So, what will be your investment strategy? How can you minimize your ris

Level of difficulty won’t be hard.

I need an response asap

this will cover below

1) investment criteria(NPV, IRR, Payback Period, Capital budgeting rule)

2) Making Capital investment Decision(CCA, ETC)

3) Project analysis(Project, Sensitivity, Scenario)

4) Cost of Capital (Cost of equity, preferred shares and debt, WACC)

5) Capital Structure(Leverage, optimal Capital structure, financial distress)

6) Dividends and Distributions(relevant, irrelevant)

7) International Finance(Cross rate, Foreign exchange markets, cross-rate arbitrage, purchasing power parity, interest rate parity, covered interest arbitrage)

8) Enterprise risk management(Forward, option, futures, swaps)

9) Options(option valuation, other option uses)

multiple choice and a long answer question will be there

Some are multiple-choice and others require being solved and worked through. Will list the topics that are covered at the bottom of this description. Can only send one question at a time. Can not go back to a question either. Once it is complete it’s gone. There is no time limit. You are able to stop at one question and come back at a later time which I will have to do. If you don’t feel confident in doing these Pearson my lab econ questions to a 100% certainty, please don’t bid on the question because I will give a bad review.

Outline 1 (Chapter 5: The Wealth of Nations – Defining and Measuring Macroeconomic Aggregates)

• Macroeconomic Questions
• National Income Accounts: Production = Expenditure = Income
  • Production
  • Expenditure
  • Income
  • Circular Flows
  • National Income Accounts: Production
  • National Income Accounts: Expenditure
  • National Income Accounting: Income
• What isn’t measured by GDP?
  • Physical capital depreciation
  • Home production
  • The Underground Economy
  • Negative Externalities
  • Gross domestic product versus Gross national product
  • The increase in income inequality
  • Leisure
  • Does GDP buy happiness?
• Real versus Nominal
  • The GDP Deflator
  • The Consumer Price Index
  • Inflation
  • Adjusting Nominal Variables

Outline 2 (Chapter 6: Aggregate Incomes)

• Inequality around the world
• Productivity and the aggregate production function
  • Productivity differences
  • The aggregate production function
  • Labor
  • Physical Capital and Land
  • Technology
  • Representing the Aggregate Production Function
• The role and determinants of technology
  • Technology
  • Dimensions of Technology
  • Entrepreneurship

Outline 3 (Chapter 9: Employment and Unemployment)

• Measuring employment and unemployment
• Equilibrium in the labor market
  • The demand for labor
  • Shifts in the labor demand curve
  • The supply of labor
  • Shifts in the labor supply curve
  • Equilibrium in a competitive labor market
• Why is there unemployment?
  • Voluntary unemployment
  • Job search and frictional unemployment
• Wage rigidity and structural unemployment
  • Minimum wage laws
  • Labor unions and collective bargaining
  • Efficiency wages
  • Downward wage rigidity
• Cyclical unemployment and the natural rate of unemployment

Outline 4 (Chapter 11: The Monetary System)

• Money
  • The functions of money
  • Types of money
  • The money supply
• Money, prices and GDP
  • Nominal GDP, real GDP and inflation
  • The quantity theory of money
• Inflation
  • What causes inflation?
  • The consequences of inflation
  • The social costs of inflation
  • The social benefits of inflation
• The Federal Reserve
  • The Central Bank and the objectives of monetary policy
  • What does the central bank do?
• Bank reserves and the plumbing of the monetary system
  • Bank reserves and liquidity
  • The demand side of the federal funds market
  • The supply side of the federal funds market and equilibrium in the Federal funds market
  • The Fed’s influences on the money supply and the inflation rate
  • The relationship between the federal funds rate and the long-term real interest rate

Outline 5 (Chapter 12: Short-Run Fluctuations)

• Economic fluctuations and business cycle
• Macroeconomic Equilibrium and Economic Fluctuations
  • Labor Demand and Fluctuations
  • Sources of Fluctuations
    • Technology shocks: Explanation from real business cycle theory
    • Sentiments and multipliers: Explanation from John Maynard Keynes
    • Monetary and Financial Factors: Explanation from Milton Friedman
  • Multipliers and Economic Fluctuations
  • Equilibrium in the medium run: Partial recovery and Full recovery
• Modeling Expansions

Outline 6 (Chapter 13: Countercyclical Macroeconomic Policy)

• The role of countercyclical policies in economic fluctuations
• Countercyclical monetary policy
  • Controlling the federal funds rate
  • Other tools of the Fed
  • Expectations, Inflation and Monetary Policy
  • Contractionary monetary policy: control of inflation
  • Zero lower bound
  • Policy Trade-offs
• Countercyclical Fiscal Policy
  • Fiscal policy over the business cycle: Automatic and Discretionary components
  • Analysis of Expenditure based fiscal policy
  • Analysis of taxation based fiscal policy
  • Fiscal policies that directly target the labor market

Policy waste and policy lags

Question 1 (This question has four parts (a), (b), (c) and (d))

In March 2021, ASX-listed company Computershare Ltd (CPU) raised $835M through a renounceable rights issue.

(a) Is this an example of a primary or secondary market transaction? Justify your classification.

(b) Was this transaction carried out in the money or capital market? Justify your classification by explaining what distinguishes these two markets.

(c) Was Computershare undertaking direct or indirect financing? Justify your answer.

(d) Explain whether Computershare is a surplus or deficit unit in this instance.

(2 + 2 + 2 + 2 = 8 marks)

Question 2 (This question has three parts (a), (b) and (c))

• Given the below quotes for the Japanese Yen and the Malaysian Ringgit, calculate the MYR/JPY cross rate.
• JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from an Australian supplier to the value of AUD $700,000. How much will this order cost in Indian rupees (INR) if the bank has quoted JJ Fashion an AUD/INR exchange rate of 54.07 – 54.98?
• Would JJ Fashion Wholesalers Ltd prefer the AUD/INR exchange rate to be higher or lower? Why?

USD/JPY 110.38

USD/MYR 0.43.

(3 + 3 + 2 = 8 marks)

Question 3 (This question has four parts (a), (b), (c) and (d))

The following table shows the possible states of the milk market for the coming year, and the returns Dairy Farmers Ltd and Magic Milkshakes Ltd expect under the different milk price scenarios.

Milk Market	Probability	Dairy Farmers Ltd Return	Magic Milkshakes Ltd Return
High Milk Prices	15%	15%	-18%
Average Milk Prices	55%	8%	12%
Low Milk Prices	30%	-10%	20%

• Calculate the expected return of Dairy Farmers Ltd, Magic Milkshakes Ltd and a portfolio with 60% of funds invested in Dairy Farmers Ltd and 40% invested in Magic Milkshakes Ltd.

(b) Calculate the risk of both the individual company expected returns, and the risk of the portfolio mentioned in (a). The correlation between the returns of the two companies is -0.2.

(c) Interpret your calculations in (a) and (b) regarding the expectations for the portfolio, assuming a normal distribution.

(d) Is the investor better off investing in the portfolio, or should he/she pick just one? Justify your recommendation.

(4 + 7 + 3 + 2 = 16 marks)

Question 4 (This question has four parts (a), (b), (c) and (d))

• You have decided to start saving for an extended overseas trip in five years’ time. If you put $800 per month into a savings account at ANZ earning 2.5% p.a. compounding monthly at the beginning of each month, how much will you have after five years?
• How much interest will you have earned over the period?
• What is the effective annual interest rate you will have earnt on your savings?
• You realise you should check out the interest rates on offer at some other banks to see if you can get a better deal. You are disappointed to discover that they all have the same headline rate of 2.5%. However, the NAB rate is compounding daily, while the CBA rate is compounding semi-annually. Of the three savings accounts on offer, which should you choose and why?

(4 + 2 + 2 + 2 = 10 marks)

Question 5 (This question has two parts (a) and (b))

(a)GrowthSec Ltd has raised $10M in debt funding by issuing 100 5 year bonds with a face value of $100,000 each. The bonds pay semi-annual coupons at 6% p.a. If the yield to maturity is 7% p.a., what will be the price of each bond?

• If after one year the bond is trading at a premium, what must have happened to market interest rates? Why has this impacted the bond price?

(5 + 3 = 8 marks)

Question 6 (This question has three parts (a), (b) and (c))

• Your client, Jane Hislop, has an investment portfolio which is 30% invested in Fund 1 and 70% invested in Fund 2. Calculate the beta of her portfolio if:
  • The standard deviation of Fund 1 is 8%, the standard deviation of Fund 2 is 16% and the standard deviation of the market is 10%.
  • The correlation between Fund 1 and the market is 0.9 and the correlation between Fund 2 and the market is 0.7.
• Explain to Jane how risky her individual fund investments are, and the risk of her portfolio relative to the market.
• Relative to return of the market, what return can she expect from her individual funds, and from her overall portfolio?

(4 + 3 + 3 = 10 marks)