Question

3.

Australian universities are facing loss of revenue due to a significant slump in international student numbers, as institutions lose out to competitors in the United States, Britain and Canada.

International student commencement were down 9.3 per cent on the previous year, a stark turnaround in a sector that enjoyed record growth over the past decade. What factors do you think are impacting on this sector?

4.

Based on capital asset pricing model, what is the expected return for the following security?

Standard Deviation of Security                                                 =         0.24

Standard Deviation of Market                                                  =         0.15

Expected Return of Market                                                       =         0.08

Correlation of Returns (security & market)                            =         0.70

Risk Free Rate                                                                              =         0.03

Answer 1

3. The factors that has created the problem of slump that is sudden fall un number of international students are as follows:

• first of all emergence of the quality competitors in US,Britain,Canada
• Offering good,innovative type of facilities and good and competant teaching faculty
• Offering scholarships to attract students and also giving fees discount and concession
• also securing the future of the students by giving them good placement opportunities
• More practical learning in an innovative way
• Feeling of safety and protection as student live alone there
• Reconization of the degree all over the world etc

4.As per CAPM :

Expected Return(Re)= Rf + (Rm-Rf) * Be Be= (Correlation * S.D of security) / S.D of market = (0.70*0.24)/0.15 =1.12

Re= 0.03 + (0.08-0.03)*1.12 = 0.03 +0.056 Re= 0.086 = 8.6%