Fight Finance

(a) 0.0072, 0.09, 0.0002.

(b) 0.0139, 0.18, 0.0005.

(c) 0.0139, 6.2876, 0.0055.

(d) 0.015, 0.1956, 0.0005.

(e) 0.015, 0.1956, 0.006.

(a) -1.3529627%

(b) -0.4977348%

(c) 0.4977348%

(d) 1.3529627%

(e) 1.3621776%

(a) $116.25

(b) $74.04

(c) $85.89

(d) $83.75

(e) $71.38

(a) Day of the payment date, between the payment date's morning opening price and afternoon closing price.

(b) Night before the payment date, between the previous day's afternoon closing price and the payment date's morning opening price.

(c) Day of the ex-dividend date, between the ex-dividend date's morning opening price and afternoon closing price.

(d) Night before the ex-dividend date, between the last with-dividend date's afternoon closing price and the ex-dividend date's morning opening price.

(e) Day of the last with-dividend date, between the with-dividend date's morning opening price and afternoon closing price.

(a) $71.2986

(b) $62.0921

(c) $61.5028

(d) $54.276

(e) $53.5612

(a) 0.3039% pa

(b) 3.8481% pa

(c) 4.1519% pa

(d) 7.3922% pa

(e) 7.6961% pa

(a) The returns ##r_\text{t monthly}## are continuously compounded monthly returns.

(b) The mean, median and mode of the continuously compounded annual return is expected to equal 0.8% per month.

(c) The annualised average continuously compounded return is ##\bar{r}_\text{cc annual}=12×0.008=0.096=9.6\%\text{ pa}##. The annualised standard deviation is ##\sigma_\text{annual} = \sqrt{12}×0.15=0.519615242 = 52\%\text{ pa}##.

(d) If the current price of the BHP shares is $20, they're expected to have a median value of $52.2339 ##(= 20×e^{0.008×12×10})## in 10 years.

(e) If the current price of the BHP shares is $20, they're expected to have a mean value of $13.5411 ##(= 20×e^{(0.008 - 0.15^2/2)×12×10})## in 10 years.

(a) Buffett is clever and by reading the news and financial reports he is able to buy under-priced stocks and sell over-priced stocks. This provides evidence for rejecting the semi-strong and strong form EMH.

(b) Buffett was lucky, his strategy happened to be the right one, not due to its merits, just by chance. This provides no evidence for or against the weak, semi-strong or strong form EMH.

(c) Buffett’s investment strategy exposes investors to higher undiversifiable risk than the market and therefore deserves a higher return. This provides no evidence for or against the weak, semi-strong or strong form EMH.

(d) Buffett is an insider trader and is able to make money from his private information. This provides evidence for rejecting the semi-strong and strong form EMH. (Note: Warren Buffett is not an insider trader, he is an honest philanthropist, but assume the contrary in this answer option).

(e) Buffett may not have beaten the market because the graphs ignore dividends - the S&P500 is the price index rather than the accumulation index and BRK pays no dividends, so even though BRK has a higher capital return than the S&P500, the total returns could be equal. This provides no evidence for or against the weak, semi-strong or strong form EMH.

If the Australian dollar quote of 0.8 USD per AUD suddenly falls to 0.7 USD per AUD, has the Australian dollar or against the US dollar?

(a) $20,000

(b) $28,000

(c) $35,000

(d) $40,000

(e) $50,000