# Finance and Term Bank Deposit

Topics: Finance, Decision theory, Risk Pages: 2 (437 words) Published: June 27, 2013
TOPIC 1 Tutorial Questions (Due in week 2 commencing 4th March)

| Hint Box|
Question 1:Using the decision model from page 5 of the text book explain how you allocate your time each week during the study period to achieve a credit grade in AFB. | Remember to present your answer using the steps in the decision making process.The constraint is 24 hours per day and 7 days in the week.| Question 2:Accounting is described as the language of business, as everybody is affected by the business world, should everybody be obliged to study accounting?| Consider who is meant by everyone in the context of the question. Does the question mean all people or all people in business or all students etc. Some thoughts or ideas are all that is required here. | | |

Question 3:
Daniel is a sessional staff tutor at the university. He earns \$25 000 per year from this activity. He also recently competed in a television game show called Temptation and won \$50,000 (lucky!). He is considering three alternative courses of action, investing in long term bank deposit which pays 6% interest per year, investing in the share market or starting his own tutoring business. He wants to maximise his financial return. He enjoys teaching and interacting with students and would like to continue tutoring. Investing in the share market will enable him to remain in his present job (still earning \$25 000 per annum). He estimates that there is a 40% likelihood that the investment will be successful and return (profit) of \$50,000 p.a. a 35% likelihood he will make a return of \$30,000 p.a. and a 25% chance that he will lose \$25,000 p.a. Daniel will invest all of his \$50,000 winnings in the share market. Starting the tutoring business will mean that he must leave his present job. He has worked out that if his business does poorly it will return him \$30,000 p.a. but should it be successful it is expected to make him \$60,000 p.a. There is a 70% likelihood that it will be successful and...