## Part A: Using examples- explain following in terms of how these are used for financial planning. attached retrenches and each one need to be around page a. Asset allocation b. Rule

Part A:    Using examples, explain following  “ in terms of  how these are used for financial planning”.

attached retrenches  and  each one  need to be around page

a.     Asset allocation

b.     Rule of 100x

c.      Dollar averaging

d.     Fund expense ratios

e.     Fund Standard deviation

f.      Fund Beta

g.     Portfolio beta

Part B:  Planning problems using Excel

1.     Mortgage payments :

·       Loan amount : \$200,000

·       Interest rate (annual): 4.00 %

·       Term : 30 years

·        Calculate

i.     monthly payments:  ( Hint : Rate and number of periods should be adjusted for monthly)

ii.     Total  interest amount over the life of the loan

2.     In reference to (1, above).

a.     Calculate PMT ( Monthly payments) if you want to pay of the above loan in 20 years

b.     How much less interest will you pay  over the life of the loan ( versus paying in 30 years)

3.     Mary is 30 years old and has \$ 20,000 in her investment account equally spread in two funds and plans to add additional \$ 2000 in each fund

·         Fund A :

i.      Current amount : \$ 10,000

ii.       Historical performance , 10 year average : 6.5 %

·         Fund  B  :

i.      Current amount : \$ 10,000

ii.       Historical performance , 10 year average : 5 .5 %

·         Calculate ( using 10 year average performance) amount in each fund, and total portfolio  at      end of 10 years, 20 years and 30 years

4.     Jane is 40 years old and has \$ 50,000 in her investment  account equally spread . And she plans to put in \$ 2000 every  year in each of the two funds .

·       Fund A :

i.     Current amount : \$ 25,000

ii.     Historical performance , 10 year average : 8.5 %

iii.     Fund beta : 1.2

·       Fund  B  :

i.     Current amount : \$ 25,000

ii.      Historical performance , 10 year average : 4 .5 %

iii.     Fund beta : 0.5

a.     Using ten year average performance, calculate amount in each fund, and total portfolio  at end of 10 years, 20 years and 30 years

b.     Calculate portfolio beta at 10 year, 20 years and 30 years  ( Hint : Portfolio beta  is weighted average beta . Covered in Std deviation and Beta lectures…. recorded lecture for Beta)

5.     Calculate Bond price; ( 10 % of this assignment )

a.     Par : \$1000

b.     Yield maturity : 6.0%

c.      Term left till maturity : 22 years

d.     Coupon rate : 5 %

e.     Bond Price : ?

6.     In reference to above ( # 5) ( 5  %  of this assignment)

7.     Calculate Bond Yield to maturity RATE ( 10 % of this assignment) )

a.     Bond Price : \$ 1050

b.     Par : \$ 1000

c.      Term to maturity 22 years

d.     Coupon rate : 4 %

e.     Yield to maturity Rate : ?

## Part A: Using examples- explain following in terms of how these are used for financial planning. attached retrenches and each one need to be around page a. Asset allocation b. Rule

Part A:    Using examples, explain following  “ in terms of  how these are used for financial planning”.

attached retrenches  and  each one  need to be around page

a.     Asset allocation

b.     Rule of 100x

c.      Dollar averaging

d.     Fund expense ratios

e.     Fund Standard deviation

f.      Fund Beta

g.     Portfolio beta

Part B:  Planning problems using Excel

1.     Mortgage payments :

·       Loan amount : \$200,000

·       Interest rate (annual): 4.00 %

·       Term : 30 years

·        Calculate

i.     monthly payments:  ( Hint : Rate and number of periods should be adjusted for monthly)

ii.     Total  interest amount over the life of the loan

2.     In reference to (1, above).

a.     Calculate PMT ( Monthly payments) if you want to pay of the above loan in 20 years

b.     How much less interest will you pay  over the life of the loan ( versus paying in 30 years)

3.     Mary is 30 years old and has \$ 20,000 in her investment account equally spread in two funds and plans to add additional \$ 2000 in each fund

·         Fund A :

i.      Current amount : \$ 10,000

ii.       Historical performance , 10 year average : 6.5 %

·         Fund  B  :

i.      Current amount : \$ 10,000

ii.       Historical performance , 10 year average : 5 .5 %

·         Calculate ( using 10 year average performance) amount in each fund, and total portfolio  at      end of 10 years, 20 years and 30 years

4.     Jane is 40 years old and has \$ 50,000 in her investment  account equally spread . And she plans to put in \$ 2000 every  year in each of the two funds .

·       Fund A :

i.     Current amount : \$ 25,000

ii.     Historical performance , 10 year average : 8.5 %

iii.     Fund beta : 1.2

·       Fund  B  :

i.     Current amount : \$ 25,000

ii.      Historical performance , 10 year average : 4 .5 %

iii.     Fund beta : 0.5

a.     Using ten year average performance, calculate amount in each fund, and total portfolio  at end of 10 years, 20 years and 30 years

b.     Calculate portfolio beta at 10 year, 20 years and 30 years  ( Hint : Portfolio beta  is weighted average beta . Covered in Std deviation and Beta lectures…. recorded lecture for Beta)

5.     Calculate Bond price; ( 10 % of this assignment )

a.     Par : \$1000

b.     Yield maturity : 6.0%

c.      Term left till maturity : 22 years

d.     Coupon rate : 5 %

e.     Bond Price : ?

6.     In reference to above ( # 5) ( 5  %  of this assignment)