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Assessment 2Assignment 2 is worth 20% of total assessment and is marked out of 100. Please show all workings including any formula used.Question 1 (20 marks) (show all workings)This question relates to material covered in the Topic 3 on Financial Mathematics. This question addresses the 6th subject learning outcome.a.A couple wants to accumulate $10,000 by making payments of $800 at the end of each half year into a savings account that earns interest of 10% per annum. Find the number of full payments required and the size of the concluding payment.b.A woman wins $200,000 in a lottery. She takes only $20,000 in cash and invests the balance at a rate of interest of 10% with the understanding that she will receive 180 equal monthly payments, with the first one to be made in 4 years. Find the size of the payments.c.Dr.Ritz has been depositing $4,000 in her savings account every December since 2007. Her account earns 5% compounded annually. How much will she have in December 2017? (Assume a deposit will be made in the year 2017).d.Mary Tune will receive $20,000 every year for the next 10 years as a payment for a new song she has written. If a 6.0% rate is applicable, should she be willing to sell out her future rights now for $150,000?e.Mr. Tomas wants to buy an annuity of $1,000 a year for 10 years that is protected against inflation. The ABC Trust Company offers to sell him an annuity where payments increase each year by exactly 10%. Find the cost of this annuity if the rate of interest is 12% per annum.Question 2 (20 marks)This question relates to material covered in the Topic 1. This question addresses the 1st, 2nd and 3rd subject learning outcomes.Write a short essay of 300 words for each of the following questions. For each question, illustrate your answer with an appropriate example. Describe the ‘maximisation of shareholder wealth’ concept and contrast it with the notion of ‘maximisation of profit’.‘Risk aversion implies that only risk-free investments will be undertaken by corporate managers’. Critically evaluate this statement (indicate whether you agree or disagree in your answer).Question 3 (60 marks)This question relates to material covered in the Topics 3-5. This question addresses the 1st, 2nd and 3rd subject learning outcomes.i.Find the monthly holding period returns for 2016 for Commonwealth Bank (CBA), Rio Tinto (RIO) and the market (MKT) as proxied by the All Ordinaries index. The monthly holding period return is the return you would receive if you bought an asset on the first day of the month (opening price) and sold it on the last day of the month (closing price). Using Excel, graph your % return results on one graph with returns on the y axis and time on the x axis to enable comparison between options. (Use 'Close' rather than 'Adjusted Close' for the selling price) Note: Monthly opening price MUST equal previous month closing price. When calculating return students should use the previous period closing value as the opening value for their next calculation. It is recommended that students use a line graph within the Excel chart options to allow effective comparison of performance between the different securities (15 marks).ii.For each investment, what is the average monthly holding period return? (6 marks).iii.For each investment, what is the annual holding period return? (6 marks).iv.Calculate the standard deviation of the monthly rates of return for each share and the market (9 marks).v.Using Excel plot your results from (iii) and (iv) above with risk on the x axis and return on the y axis (3 marks).v.If the 10 year government bond rate is 3.25% and the long term return on the market is 7%, assuming the beta (β) for CBA is 1.11 and for RIO is 0.95, use the Capital Asset Pricing Model (CAPM) to find the expected returns for CBA and RIO (6 marks).vi.Construct the Security Market Line (SML) showing where CBA and RIO lie (5 marks).vii.Based on your findings construct a portfolio made up of 60% CBA and 40% RIO. Calculate the estimated return and β for this portfolio (4 marks).viii.Based on your understanding of the CAPM and the SML, which of these asset(s) or portfolio(s) would you invest in and which would you not invest in. Explain your choice (6 marks). RationaleThe assessment task addresses several of the learning outcomes for the subject including that students:be able to evaluate and explain the congruence of accounting, finance and treasury functions;be able to explain and critique the objectives of financial management in contemporary organisations;be able to critically evaluate mainstream financial theory and concepts;be able to demonstrate appropriate communication skills in the context of corporate finance; andbe able to demonstrate specific technical competencies and skills in utilising quantitative techniques in financial analysis.

Purpose of Assignment **NO PLAGIARISM** This activity helps students recognize the significant role accounting plays in providing financial information to management for decision making through the evaluation of financial statements. This experiential assignment requires students to use ratios to evaluate and analyze a company's liquidity, solvency, and profitability. Assignment Steps Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC), University Library, Library resources: Company Directories and Financials Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products. Select a publicly traded, U.S. corporation with which you are familiar or one where you currently work or have worked in the past.Research the company on the Internet and download the Income Statement, Statement of Shareholders' Equity, Balance Sheet, and Statement of Cash Flows.Develop a minimum 700-word examination of the financial statements and include the following:Determine the net income for the current fiscal year (FY). Is this income up or down from the prior year? Explain the relevance of changes in net income to investors.Determine the ending balance in shareholders' equity. Why would organizations such as labor unions be interested in this?Determine the total value of assets. Discuss the relevance of the total value of assets to potential creditors and why this is important.Compute the return on assets. Discuss the relative profitability of the company based on your results.Compute the working capital and current ratio. Evaluate the relative liquidity of the company based on your results.Compute the debt to assets ratio and the free cash flow for your company. Analyze the results and comment on the relative solvency of the company.Discuss how the financial statements are used in your current role or a position you would like to hold. How might these aid you in managerial decision making?Show your work in Microsoft® Word or Excel®. Complete calculations/computations using Microsoft® Word or Excel®. Include the four financial statements along with your assignment.Format your assignment consistent with APA guidelines.