Question? Call Us  +1 (817) 546-4770

FIN205 Business Finance

Academic Anxiety?

Get an original paper within hours and nail the task

156 experts online

Free Samples

FIN205 Business Finance

.cms-body-content table{width:100%!important;} #subhidecontent{ position: relative;
overflow-x: auto;
width: 100%;}

FIN205 Business Finance

0 Download3 Pages / 722 Words

Course Code: FIN205
University: Charles Darwin University

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

Question:

a. Pick the month you were born. Draw the yield curve for that month in 2008 and 2009. Also, draw the yield curve for the month falling exactly in the middle. (For instance, if you were born in April, draw the yield curves for April 2008, October 2008 and April 2009.)
b. What should be the shape of the yield curve under normal circumstances? Why?
c. Compare the shapes of the three yield curves that you have drawn. From the yield curves, can you infer anything about the market’s expectation about the future of Australian economy?
 
d. What is the yield on 2-year bond in January 2008? Under the expectations theory, what interest rate do investors expect on a 1-year bond next year (i.e., January 2009)? Using the same method calculate the expected interest rates on 1-year bonds for all the months of 2009.
e. How do the expected interest rates compare with the actual interest rates in 2008? Do your calculations validate/not validate the expectations theory? List some possible reasons why the expectations hypothesis may not hold.

Answer:
In the normal circumstances, the shape of a yield curve is an upward slope because of the face that the yield of short term debt is always lower than the yield of long term debt. 
The below yield curve shape explains the upward situation because of the short towards the long term debt. All the given three curves depict the same outcome that the return from the long term debt is always higher than the return from short term debt (Garlappi, Uppal and Wang, 2007).

two year’s bond yield (2008)

 

Year-1

Year-2

Actual interest rate Year 2

Actual interest rate Year -1

Expected Interest rate

Jan-2008

6.83%

6.61%

1.1365

1.0683

1.0638

Feb-2008

7.12%

6.82%

1.1411

1.0712

1.0652

Mar-2008

7.03%

6.30%

1.13

1.0703

1.0558

Apr-2008

7.21%

6.33%

1.1306

1.0721

1.0546

May-2008

7.35%

6.60%

1.1364

1.0735

1.0585

Jun-2008

7.26%

6.97%

1.1442

1.0726

1.0668

Jul-2008

6.87%

6.64%

1.1372

1.0687

1.0641

Aug-2008

6.34%

5.83%

1.12

1.0634

1.0532

Sep-2008

5.63%

5.51%

1.1133

1.0563

1.0539

Oct-2008

4.33%

4.35%

1.0889

1.0433

1.0437

Nov-2008

3.09%

3.64%

1.074

1.0309

1.0419

Dec-2008

2.67%

3.07%

1.0624

1.0267

1.0347

 
 

two year’s bond yield (2009)

 

Year-1

Year-2

Actual interest rate Year 2

Actual interest rate Year -1

Expected Interest rate

Jan-2009

2.69%

2.83%

1.05741

1.0269

1.02971

Feb-2009

2.59%

2.80%

1.05685

1.0259

1.03017

Mar-2009

2.74%

2.87%

1.05826

1.0274

1.03004

Apr-2009

2.69%

3.16%

1.06419

1.0269

1.03631

May-2009

2.87%

3.46%

1.07039

1.0287

1.04053

Jun-2009

2.95%

3.90%

1.07961

1.0295

1.04867

Jul-2009

3.00%

4.04%

1.08242

1.03

1.0509

Aug-2009

3.19%

4.57%

1.09349

1.0319

1.05968

Sep-2009

3.23%

4.42%

1.0904

1.0323

1.05628

Oct-2009

3.66%

4.82%

1.09877

1.0366

1.05998

Nov-2009

3.73%

4.71%

1.09645

1.0373

1.05702

Dec-2009

3.83%

4.54%

1.09282

1.0383

1.05251

Expectations theory explains that the forward rates of a bond express about the expected rates from the bond (Harvey, Liechty, Liechty and Müller, 2010). In case of the given data, the 2008 bond has been compared with the 2009 bond and it has been measured that huge changes have occurred into the expected and actual rates because of the demand of the investors and the position of the market.

spread between Australian Government Bonds and Treasury bonds

F2  CAPITAL MARKET YIELDS – GOVERNMENT BONDS

 

 

 

 

Per cent per annum

 

 

 

 

 

 

 

 

 

 

Australian Federal Government

 

 

NSW Treasury

 

Difference

 

 

Years to Maturity

 

Years to Maturity

Years to Maturity

Date

3 yrs

5 yrs

10 yrs

3 yrs

5 yrs

10 yrs

3 yrs

5 yrs

10 yrs

Jan-2008

6.58

6.34

6.08

6.99

6.92

6.58

-0.41

-0.57

-0.50

Feb-2008

6.75

6.50

6.29

7.33

7.26

6.96

-0.59

-0.76

-0.67

Mar-2008

6.21

6.10

6.09

6.94

6.90

6.82

-0.74

-0.80

-0.73

Apr-2008

6.25

6.19

6.17

6.89

6.84

6.78

-0.64

-0.65

-0.61

May-2008

6.47

6.33

6.36

7.02

6.91

6.89

-0.54

-0.58

-0.54

Jun-2008

6.84

6.69

6.59

7.36

7.23

7.10

-0.52

-0.54

-0.51

Jul-2008

6.49

6.40

6.37

7.14

7.05

7.01

-0.65

-0.65

-0.64

Aug-2008

5.74

5.77

5.86

6.35

6.38

6.49

-0.62

-0.61

-0.63

Sep-2008

5.48

5.54

5.65

6.21

6.24

6.33

-0.73

-0.70

-0.69

Oct-2008

4.59

4.83

5.22

5.27

5.48

5.85

-0.68

-0.65

-0.63

Nov-2008

3.96

4.28

4.94

4.75

5.14

5.69

-0.79

-0.87

-0.75

Dec-2008

3.43

3.72

4.22

4.54

4.87

5.12

-1.10

-1.15

-0.90

Jan-2009

3.15

3.50

4.09

4.27

4.64

4.93

-1.12

-1.14

-0.85

Feb-2009

3.08

3.59

4.25

3.96

4.50

5.21

-0.88

-0.91

-0.95

Mar-2009

3.20

3.73

4.33

4.24

4.87

5.62

-1.05

-1.14

-1.29

Apr-2009

3.53

4.05

4.51

4.32

4.93

5.59

-0.79

-0.88

-1.07

May-2009

3.91

4.47

5.00

4.52

5.17

5.90

-0.61

-0.69

-0.90

Jun-2009

4.47

5.10

5.56

5.02

5.70

6.36

-0.55

-0.59

-0.81

Jul-2009

4.59

5.21

5.49

5.07

5.63

6.12

-0.48

-0.42

-0.63

Aug-2009

4.99

5.39

5.53

5.40

5.77

6.09

-0.41

-0.37

-0.55

Sep-2009

4.82

5.14

5.32

5.12

5.54

5.86

-0.31

-0.40

-0.54

Oct-2009

5.14

5.35

5.45

5.47

5.77

5.98

-0.33

-0.41

-0.53

Nov-2009

4.99

5.24

5.47

5.34

5.67

6.05

-0.35

-0.43

-0.58

Dec-2009

4.83

5.15

5.47

5.21

5.60

6.09

-0.39

-0.45

-0.62

On the basis of the given graph, it has been found that the NSW performance is better than the Australian government bonds. The below pattern is negative because of the deduction of the return of NSW government bonds from the Australian government bonds (Fernández and Gómez, 2007).
The calculations explain that the stock position of both the companies is underpriced in the capital market.
Introduction:
This report has been prepared to explain the performance of QAN and AMP.
Analysis:
The return of Qantas limited and AMP has been evaluated firstly in the report. The calculations explain that the QAN stock price is higher in current market. However, earlier the return from AMP shares was higher. The overall position of AMP stock is better because of the lower fluctuations in the stock price (Higgins, 2012). It leads to the conclusion that the AMP is better choice for the purpose of investment.
Further, the risk of both the stocks has been measured. The beta value of QAN and AMP is 1.172 and 0.610. It explains that the beta coefficient of AMP is lower than the QAN because of the lower volatility. Further, the required rate of return of QAN is higher. However, the calculations explain that the stock position of both the companies is underpriced in the capital market.
Conclusion:
This analysis leads to the conclusion that the investment must be done in the AMP shares because of average return and risk position.
References:
Fernández, A., and Gómez, S. 2007. Portfolio selection using neural networks. Computers & Operations Research, 34(4), p.p. 1177-1191.
Gapenski, L.C., 2008. Healthcare finance: an introduction to accounting and financial management. Health Administration Press.
Garlappi, L., Uppal, R., and Wang, T. 2007. Portfolio selection with parameter and model uncertainty: A multi-prior approach. Review of Financial Studies, 20(1), p.p. 41-81.
Harvey, C. R., Liechty, J. C., Liechty, M. W., and Müller, P. 2010. Portfolio selection with higher moments. Quantitative Finance, 10(5), p.p. 469-485.
Higgins, R. C., 2012. Analysis for financial management. McGraw-Hill/Irwin.

Free Membership to World’s Largest Sample Bank

To View this & another 50000+ free samples. Please put
your valid email id.

E-mail

Yes, alert me for offers and important updates

Submit 

Download Sample Now

Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.

UploadUnique Document

DocumentUnder Evaluation

Get Moneyinto Your Wallet

Total 3 pages

PAY 2 USD TO DOWNLOAD

*The content must not be available online or in our existing Database to qualify as
unique.

Cite This Work
To export a reference to this article please select a referencing stye below:

APA
MLA
Harvard
OSCOLA
Vancouver

My Assignment Help. (2020). Business Finance. Retrieved from https://myassignmenthelp.com/free-samples/fin205-business-finance/lower-fluctuations.html.

“Business Finance.” My Assignment Help, 2020, https://myassignmenthelp.com/free-samples/fin205-business-finance/lower-fluctuations.html.

My Assignment Help (2020) Business Finance [Online]. Available from: https://myassignmenthelp.com/free-samples/fin205-business-finance/lower-fluctuations.html[Accessed 18 December 2021].

My Assignment Help. ‘Business Finance’ (My Assignment Help, 2020) accessed 18 December 2021.

My Assignment Help. Business Finance [Internet]. My Assignment Help. 2020 [cited 18 December 2021]. Available from: https://myassignmenthelp.com/free-samples/fin205-business-finance/lower-fluctuations.html.

×
.close{position: absolute;right: 5px;z-index: 999;opacity: 1;color: #ff8b00;}

×

Thank you for your interest
The respective sample has been mail to your register email id

×

CONGRATS!
$20 Credited
successfully in your wallet.
* $5 to be used on order value more than $50. Valid for
only 1
month.

Account created successfully!
We have sent login details on your registered email.

User:

Password:

Looking for affordable assignment help Melbourne service? Look no further and get in touch with MyAssignmenthelp.com right away. We are the No.1 choice for students seeking budget-friendly assignment help services. In addition to that, we have designed our writing service with a plethora of freebies, discounts, and offers available around the year. We are not an expensive affair. Considering the students’ budget, we have created a personalized pricing plan that varies as per your requirements.

Latest Management Samples

div#loaddata .card img {max-width: 100%;
}

MPM755 Building Success In Commerce
Download :
0 | Pages :
9

Course Code: MPM755
University: Deakin University

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

Answers:
Introduction
The process of developing a successful business entity requires a multidimensional analysis of several factors that relate to the internal and external environment in commerce. The areas covered in this current unit are essential in transforming the business perspective regarding the key commerce factors such as ethics, technology, culture, entrepreneurship, leadership, culture, and globalization (Nzelibe, 1996; Barza, 2…
Read
More

SNM660 Evidence Based Practice
Download :
0 | Pages :
8

Course Code: SNM660
University: The University Of Sheffield

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: United Kingdom

Answers:
Critical reflection on the objective, design, methodology and outcome of the research undertaken Assessment-I
Smoking and tobacco addiction is one of the few among the most basic general restorative issues, particularly to developed nations such as the UK. It has been represented that among all risk segments smoking is the fourth driving purpose behind infections and other several ailments like asthma, breathing and problems in the l…
Read
More
Tags:
Australia Maidstone Management Business management with marketing University of New South Wales Masters in Business Administration 

BSBHRM513 Manage Workforce Planning
Download :
0 | Pages :
20

Course Code: BSBHRM513
University: Tafe NSW

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

Answer:
Task 1
1.0 Data on staff turnover and demographics
That includes the staffing information of JKL industries for the fiscal year of 2014-15, it can be said that the company is having problems related to employee turnover. For the role of Senior Manager in Sydney, the organization needs 4 managers; however, one manager is exiting. It will make one empty position which might hurt the decision making process. On the other hand, In Brisba…
Read
More

MKT2031 Issues In Small Business And Entrepreneurship
Download :
0 | Pages :
5

Course Code: MKT2031
University: University Of Northampton

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: United Kingdom

Answer:
Entrepreneurial ventures
Entrepreneurship is the capacity and willingness to develop, manage, and put in order operations of any business venture with an intention to make profits despite the risks that may be involved in such venture. Small and large businesses have a vital role to play in the overall performance of the economy. It is, therefore, necessary to consider the difference between entrepreneurial ventures, individual, and c…
Read
More
Tags:
Turkey Istanbul Management University of Employee Masters in Business Administration 

MN506 System Management
Download :
0 | Pages :
7

Course Code: MN506
University: Melbourne Institute Of Technology

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

Answer:
Introduction
An operating system (OS) is defined as a system software that is installed in the systems for the management of the hardware along with the other software resources. Every computer system and mobile device requires an operating system for functioning and execution of operations. There is a great use of mobile devices such as tablets and Smartphones that has increased. One of the widely used and implemented operating syste…
Read
More
Tags:
Australia Cheltenham Computer Science Litigation and Dispute Management University of New South Wales Information Technology 

Next

Need an essay written specifically to meet your requirements?

Choose skilled experts on your subject and get an original paper within your deadline

156 experts online

Your time is important. Let us write you an essay from scratch

Tips and Tricks from our Blog

PROJ6016 Employer Based Project

Free Samples PROJ6016 Employer Based Project .cms-body-content table{width:100%!important;} #subhidecontent{ position: relative; overflow-x: auto; width: 100%;} PROJ6016 Employer

Read More »

PPMP20009 Marking Rubric

Free Samples PPMP20009 Marking Rubric .cms-body-content table{width:100%!important;} #subhidecontent{ position: relative; overflow-x: auto; width: 100%;} PPMP20009 Marking Rubric

Read More »