Question 1
Using yield data from the Reserve Bank ofAustralia website, calculate the prices of 1 , 3 and 6 month bank-accepted bills. The
price you calculate should be for 28 July 2017. Show all workingsfor your calculations.
Remember to reference your data sources.
10
marks
Question 2
You are considering the purchase one Cochlear Ltd share on 1 July 2016.
a) Use the Yahoo? Finance website to
find the beta for Cochlear.
b) You will need a proxy for return on the market. To get this, calculate the return on the ASX 200
index for the period from 1 July 2016 to 29 June 2017. Use the Yahoo? Finance website to collect the ASX 200 data.
c) You will need
a proxy for the risk free rate. Use the RBAwebsite to find the return on a two year Government Bond on 1 July 2016.
d) Calculate
the discount rate for your Cochlear share. Show your workings.
e) Use the ASX website to identifythe payment date and amounts of
the most recent two dividends.
f) You expectthat dividends during fi/our holding period will be the same asthose you have received
since you purchased the share. You wi sell the share on 1 July 2018 and expectto receive $180 (ignore transaction costs). Using the
discount rate you calculated earlier, what price would you have been willing to pay for your share? Show all workingsfor your
calculations.
g) Use the Yahoo? Finance website to find the market price for your Cochlear share at close oftrading on 1 July 2016.
Compare this with your calculated price for a share and decide if you would purchase the share on 1 July 2016 or not. Show all workingsfor
your calculations.
h) Using a PIE multiple of 38 and the most recent annual earnings per share for Cochlear, calculate the price of
your Cochlear share. Use the ‘announcements’ section of the ASX website to locate the most recent annual report for Cochlear. Show all
workings for your calculations.
Remember to reference your data sources where you present the data.
20 marks
