Q6A - Problem Set 6 - Solutions 1. What are the main assets...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Problem Set 6 - Solutions 1. What are the main assets classes, and what are their important features? Cash and deposit type products – ST, highly liquid, low fixed returns, very low risk, non-marketable Fixed interest – ST, MT, LT, risk varies from very safe (government and semi- government, some corporations), to quite risky (firms with unreliable history of revenue, profits, returns, etc.), medium fixed returns, can be marketable but market can be thin (not as liquid as shares) Shares – MT to LT, can be quite risky, and returns can be variable, from low to high depending on type of share and its performance, volatile market subject to considerable variation of returns, risks, returns in line with company performance, good prospects for trading unwanted shares on ASX (if listed), so can be liquid. Property – LT investment, returns and risk can be high but this market is subject to business cycle movements and so ST returns and risks can be considerable, direct investment is very illiquid 2. Financial advisers usually recommend to clients that it is important that they consider diversifying investments within and across asset classes. Explain what this means and why it is important. In which other ways can one diversify?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Q6A - Problem Set 6 - Solutions 1. What are the main assets...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online