# Can anyone help with my investment banking past paper

• Jan 17th 2010, 07:08 AM
generalrommel
ection A

1. a) You are buying a share at £10 and for three years the company pays a dividend of £0.5 per year and the stock itself is valued at £12 three years later. What is the annualised rate of return of this share? (15 Marks)

b) Listed below are
estimated covariance matrix for three stocks:

A B C
A 625 - 244 118
B -244 336 225
C 118 225 184

i) Find the correlation coefficient matrix of returns on the securities. (15 Marks)

ii) Find the risk of a portfolio consisting of 30% of A, 60% of B and 10% of C.
(15 Marks)

part 2

6. a) Assume that the current price of ABC share is £50 pounds. The size of one call option is 100 shares. Assuming you short 100 ABC shares and buy 1 European call option on ABC company shares. The call option expires 1 month later and the strike price is £45 per share. The premium is £5 per share.

Calculate your profit and loss in the following cases at the expiration date:

1) ABC share price is £40 pre share
2) ABC share price is £45 pre share
3) ABC share price is £51 pre shre

Thanks guys
• Jan 17th 2010, 05:29 PM
TKHunny
Were you planning to show any of your work or explain why you want someone else to do your exams for you?

I the ARoR is "i", then define v = 1/(1+i)

Then 10 = 0.5(v + v^2 + v^2) + 12v^3

Solve for i.

If you are struggling with thisone, there is not much point in trying the other two. Good luck, though.
• Jan 18th 2010, 03:21 AM
generalrommel
Quote:

Originally Posted by TKHunny
Were you planning to show any of your work or explain why you want someone else to do your exams for you?

I the ARoR is "i", then define v = 1/(1+i)

Then 10 = 0.5(v + v^2 + v^2) + 12v^3

Solve for i.

If you are struggling with thisone, there is not much point in trying the other two. Good luck, though.

thanks no this is a past paper, which im goinbg over

its just the maths ones i am having trouble with

the research questions im ok with

thanks again
• Jan 18th 2010, 03:24 AM
generalrommel
I the ARoR is "i", then define v = 1/(1+i)

Then 10 = 0.5(v + v^2 + v^2) + 12v^3

10 = 1/2(2V^2+V)+ 12V^3

10 = V + V^2+ 12V^3

12V^3 + V^2 + V - 10 = 0

Using V = 1/(1+i)

12(1/(1+i))^3+ (1/(1+i)^2+ 1/(1+i) - 10

12/(1+i)^3 + (1+i)^2 + 1/(1+i) -10 = 0

lovly equation i;lll solve this one offline
• Jan 18th 2010, 08:59 AM
Wilmer
Quote:

Originally Posted by generalrommel
10 = 0.5(v + v^2 + v^2) + 12v^3

10 = 1/2(2V^2+V)+ 12V^3

10 = V + V^2+ 12V^3

NO. That last equation should be:
20 = V + 2V^2 + 24V^3

When doing algebra, try NOT to switch from small to large (like v to V);