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sem 1, 2008 past exam

sem 1, 2008 past exam - OFFICE USE ONLY 04135149 Monash...

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OFFICE USE ONLY AFF/AFW3121 Dr Wicky J Wickramanayake Page 1 of 7 Monash University Semester One Examination 2008 Faculty of Business and Economics Department of Accounting and Finance EXAM CODES: AFF3121/AFW3121 TITLE OF PAPER: INVESTMENTS AND PORTFOLIO MANAGEMENT EXAM DURATION: 3 hours writing time READING TIME: 10 minutes THIS PAPER IS FOR STUDENTS STUDYING AT: (office use only - tick where applicable) Berwick Clayton Peninsula ; Distance Education Open Learning ; Caulfield Gippsland ; Sunway Enhancement Studies Other (specify) During an exam, you must not have in your possession, a book, notes, paper, calculator, pencil case, mobile phone or any other material/item which has not been authorised for the exam or specifically permitted as noted below. Any material or item on your desk, chair or person will be deemed to be in your possession. You are reminded that possession of unauthorised materials in an exam is a disciplinable offence under Monash Statute 4.1. AUTHORISED MATERIALS CALCULATORS ; YES NO (Permitted calculators: Citizen SRT-135, Casio FX82MS scientific calculator, the Casio FX82AU scientific calculator, and Sharp EL-735 financial calculator, or calculators with an 'approved for use' Faculty label) OPEN BOOK YES ; NO SPECIFICALLY PERMITTED ITEMS YES ; NO if yes, items permitted are: This paper consists of six (6) questions, one (1) formulae sheet and a one (1) Normal Distribution Table printed on a total of seven (7) pages . The total marks available in the examination are 120. This examination constitutes 70% of the total assessment for this unit. Students should attempt ALL questions on this examination paper. To be eligible for a pass in this unit, students must earn a minimum of 50% in the final examination. PLEASE CHECK THE PAPER BEFORE COMMENCING. THIS IS A FINAL PAPER. STUDENT ID: ... DESK NUMBER: . THIS EXAMINATION PAPER MUST BE INSERTED INTO THE ANSWER BOOK/S AT THE COMPLETION OF THE PAPER OTHERWISE A FAIL MAY BE RECORDED
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OFFICE USE ONLY AFF3121/AFW3121 INVESTMENTS AND PORTFOLIO MANAGEMENT AFF/AFW3121 Dr Wicky J Wickramanayake Page 2 of 7 Question 1 John Hanson, 64, is a retired engineer and a client of Kevin Asset Management Associates ( Associates ). His accumulated savings are invested in Diversified Global Fund ( the Fund ), an in- house investment vehicle with multiple portfolio managers through which Associates manage nearly all client assets on a pooled basis. Dividend and capital gain distributions have produced an annual average return to John Hanson of about 8% on his $900,000 original investment in the Fund, which was made six years ago. The $1,000,000 current value of his Fund interest represents virtually all of John Hanson s net worth. Hanson is a widower. His daughter is a single parent living with her young son. While not an extravagant person, Hanson s spending has exceeded his after-tax income by a considerable margin since his retirement. As a result, his non-Fund financial resources have steadily diminished and now amount to $10,000. Hanson does not have retirement income from a private pension plan but does receive taxable government benefits of about $1,000 per month. His marginal tax rate is 40%. He
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