Subject: Financial modeling Each will involve you assessing a…

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Question Subject: Financial modeling Each will involve you assessing a… Subject: Financial modelingImage transcription textTHQ 2 7 Ps (= 3.51% 99000 P = 3.514. 100000 yolala o ( days )98300 74 180 Purchase Yield = 100000 – 98300 365 98300 180 =0 .03507 = 3.507% H . = 3 . 5 17. Sale Yield = 99000 – 9… Show more… Show moreImage transcription textwe assume that Youleads borrowed to purchase the bondthe The break-even rate of interest on borrowing is 3.51% Ifthe borrowing cost is greater than break-even… Show more… Show moreImage transcription textes 3 C dold Real! Cost of Borrowing iffees and charges are paid at maturity =$9 733 . 70 + 25000 – (1000… Show more… Show moreImage transcription textes 3 C dold Real! Cost of Borrowing iffees and charges are paid at maturity =$9 733 . 70 + 25000 – (1000… Show more… Show moreImage transcription textb Pq 4 1.67. 2.5 928 -+ 100 28 – 0.75vg28 = $ 103. 890 Clarie 2.5 100 2.592 2.5 I 2 27 28 29 Half 3… Show more… Show moreImage transcription text3 PS 6 a . Purchase Price of Bond = $100 Coupon Rate = 15%pa. Reinvestment Rate = 147 . p.G 15 43 + 100 v3 at 14%Reinvestment : lear 1 = 15 ( 1 + 0 .14 ) 2 = 19.494 … Show more… Show moreImage transcription text8 19 PS 7 Original Price = $92.25 Coupons = 3 x $15 =$45 Interest on Coupons =$51:594- 45 = $ 6. 594 – OMCapital! Gash = $151 . 59 – 92125 = $59.34… Show more… Show more Each will involve you assessing a modelling solution to a particular financial mathematics problem against a marking guide.Read and understand the questions and solutions given, then choose the answerQuestion 1 marking guide (16 marks) Part a (i) (2 marks) Give ½ a mark for indicating the diagram is drawn from Yolanda’s perspective.Give ½ a mark for indicating a negative cash flow of 98 300 at t=0 days.Give ½ a mark for indicating a positive cash flow of 99 000 at t=74 days.Give ½ a mark for any other appropriate labellingPart a (ii) (2 marks) Give ½ a mark for using the correct methodology to calculate the purchase yieldGive ½ a mark for correctly calculating Yolanda’s purchase yield.Give ½ a mark for using the correct methodology to calculate Yolanda’s sale yieldGive ½ a mark for correctly calculating Yolanda’s sale yield.Part a (iii) (2 marks) Give, either2 marks for saying ‘higher price’ accompanied by solid reasoning, OR1½ marks for saying ‘higher price’ accompanied by weak reasoning, OR1 mark for saying ‘higher price’ accompanied by no reasoning, OR½ mark for not saying higher or lower price but accompanied by solid reasoning, ORzero, otherwise.Part a (iv) (2 marks) Give 1½ marks for using the correct methodology to calculate the capital gain component (reducing appropriately for errors and omissions).Give ½ a mark for correctly calculating Yolanda’s capital gain.Part a (v) (4 marks) 2 marks for the break-even rate of interest, as follows.Give 1½ marks for using the correct methodology to calculate the break-even rate of interest (reducing appropriately for errors and omissions).Give ½ a mark for correctly calculating Yolanda’s break-even rate of interest.2 marks for saying ‘cash deficit’ and explaining it, as follows.2 marks for saying ‘cash deficit’ accompanied by solid reasoning, OR1½ marks for saying ‘cash deficit’ accompanied by weak reasoning, OR1 mark for saying ‘cash deficit’ accompanied by no reasoning, OR½ mark for not saying cash deficit or surplus, but accompanied by solid reasoning, ORzero, otherwise.Part b (i) (2 marks) 1 mark for a good cash flow diagram, as follows.Give ½ a mark for a positive cash flow of P (or equivalent) at t=0.Give ½ a mark for a negative cash flow of $800 000 at t=180 days.1 mark for calculating the borrowing cost, as follows.Give ½ a mark for using the correct method to calculate the borrowing cost.Give ½ a mark for the correct borrowing cost.Part b (ii) (2 marks) Give 1½ marks for using the correct methodology to calculate the real cost of borrowing (reducing appropriately for errors and omissions).Give ½ a mark for correctly calculating Max’s real cost of borrowing. Which marking vector is most appropriate? (The order of the numbers in the sum follows the order of the questions.) a.1½+1+2+1+3+1+1½=11  b.2+1+2+1+2½+1+1½=11  c.None of the other answers  d.2+1+2+1+3+1+1=11  e.2+1+2+1½+3+1+1½=12  f.1½+1+2+1+2½+1+1½=10½  g.2+1+2+1+3+1½+1½=12  h.2+1½+2+1+3+1+1½=12  i.2+1+2+1+3½+1+1½=12  j.2+1+2+1+3+1+1½=11½     Business Finance ACST 201 Share QuestionEmailCopy link Comments (0)