Other Calculations

Question 1

An investor pays a clean price of £116.80 for £100 nominal value of stock with a 6% coupon. Assuming the stock has exactly 6 years left to run until maturity, using the simplified method what is the gross redemption yield?

Answer 1

2.74%

Question 2

An investment property is purchased for £180,000. The transaction costs totalled £3,600. If the rent is £800 per month, of which 20% is earmarked for general expenses, what will the net yield on this purchase be?

Answer 2

4.18%

Question 3

A limited company has 10m ordinary shares in issue and £2.5m available for distribution as net dividends. The current share price is 500p. What is the dividend yield?

Answer 3

5%

Question 4

Kathryn is buying a primary residence of £140,000 and Michael is buying a primary residence for £260,000. How much more SDLT will Michael pay than Kathryn, if both are repeat buyers?

Answer 4

£2,700

Question 5

A limited company has 6,000 ordinary shareholders. In the current financial year the profits attributable to these shareholders are £1,060,000 and ordinary dividend payments are £410,000. What is the dividend cover?

Answer 5

2.59

Question 6

The share price of company X is 260p and the earnings per share is 18p. The share price of company Y is 182p and the earnings per share is 31p. What are the price earnings ratio for each company?

Answer 6

14.44 and 5.87 respectively

Question 7

Using the 2018/19 tax tables… Stacey has recently bought her first house with a purchase price of £570,000. How much stamp duty land tax did she pay, if any?

Answer 7

£18,500

Question 8

Share price 110p, earnings per share 10p, what is the P/E ratio?

Answer 8

11

Question 9

Property price £375,000
Additional costs £15,000
Rent £1,600 pm
Ongoing costs estimated 10% of rent
What is the net rental yield on this purchase?

Answer 9

4.43%
From 22/23 exam paper

Question 10

A company makes a net profit of £1,000,000. It pays £250,000 interest to bondholders and wishes to retain £400,000 as cash reserves. If it elects to pay the balance as a dividend, what would be the dividend cover?

Answer 10

2.14
From 22/23 exam paper

Question 11

Current share price 182p
Dividend 4.5p

What is the dividend yield?

Answer 11

2.47%

Question 12

Calculate the Sharpe ratio for a portfolio that has an annualised return of 9.5% if the standard deviation of the portfolio is 8% and the annual return from a risk-free investment is 3.5%.

Answer 12

0.75

Question 13

Client invests £20,000 in a deposit account paying 1.8% interest p/a but inflation was 2.2%, what will be the real value of their investment return after 12 months?

Answer 13

£19,920

Question 14

An investment trust has 16,000,000 ordinary shares and 1,000,000 outstanding warrants that give the unit holders the right to purchase at £1 per share. The trust’s assets are £24,000,000, on an undiluted basis. If all warrants are exercised, the diluted net asset value (NAV) will be how much lower than the undiluted NAV?

Answer 14

3p

Question 15

A client is saving towards her first house using a help to buy ISA, if her plan is currently worth £3,000, what is the maximum government bonus, if anything, she can claim?

Answer 15

£750

£3,000 divided by £200 = 15
15 x £50 = £750

Government pays £50 for every £200 saved, to a maximum of £3,000 bonus

Question 16

A bank account pays an interest rate of 3.6% per annum, compounded on a monthly basis, what is the EAR?

Answer 16

(1 + (0.0360 ÷ 12)) [12]
Press =
Then – 1
Then x100

Answer is 3.66%

Question 17

Interest is being charged in a monthly loan at an annual rate of 18%, what is the APR?

Answer 17

19.5%

Question 18

If the nominal rate of interest is quoted as 6% a year and interest is paid weekly, what is the EAR of interest?

Answer 18

6.18%

Question 19

Calculate the alpha of a fund that has provided an average return of 12% a year, if the fund has a beta of 1.5, the return on the market was 8% and the risk-free rate was 2%.

Answer 19

1%

Question 20

What is the holding period return for a portfolio worth £25,000 at the start of the period, £28,000 at the end of the period, and which had received £1,000 of income?

Answer 20

16%

Question 21

A portfolio was worth £20,000 at the start of the year and £24,000 at the end of the year. The following transactions took place during the year:
* £3,000 is invested at the end of March; and
* £2,000 is withdrawn at the end of September.
Calculate the MWR.

Answer 21

13.79%

Question 22

Shares in company X cost 115p when purchased, they are sold for 120p. During this time dividend payments of 1.2p per share were made. Calculate the holding period for 100 shares.

Answer 22

5.39%

Question 23

John purchased £30,000 of premium bonds 4 years ago. He has win 50 prizes of £50, three of £100 and one prize of £5,000. He cashes in the bonds at the end of 4 years. Calculate the holding period return.

Answer 23

26%

Question 24

A portfolio was valued at £100,000 at the start of the year, and by the end of the year had increased to £109,500. Income of £1,500 was paid out during the year, and after exactly 6 months, an additional £2,500 was invested. What is the MWR?

Answer 24

8.4%