Thread: Can anyone help with my investment banking past paper

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

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.

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

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

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);
it'll only give you headaches!

And really, solve for v. "i" is a piece of cake after that.