AAFM GLO_CWM_LVL_1 Exam - Topic 4 Question 72 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam

Question #: 72
Topic #: 4

A portfolio manager is considering buying Rs. 1,00,000 worth of Treasury bills for Rs. 96,211 versus Rs. 100,000 worth of commercial paper for Rs. 95,897. Both securities will mature in nine months. How much additional return will the commercial paper generate over the Treasury bills?

A0.45%

B0.27%

C0.35%

D0.21%

Show Suggested Answer

Suggested Answer: A

by Alishia at Jan 23, 2024, 05:37 PM

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Alton

9 months ago

0.45%? That sounds too high to me!

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Bonita

10 months ago

I'm leaning towards option C, seems right.

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Tennie

10 months ago

Wait, how is the commercial paper better?

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Tula

10 months ago

I think the return difference is pretty small.

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Taryn

10 months ago

Commercial paper is cheaper than T-bills!

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Vesta

11 months ago

I feel like the answer might be around 0.35%, but I can't recall the exact steps to confirm that.

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Harrison

11 months ago

I’m a bit confused about the exact formula to use for the return calculation. Was it just the difference in price divided by the face value?

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Alida

11 months ago

I remember a practice question where we compared yields on different investments. I think the commercial paper should yield more since it's priced lower.

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Mabelle

11 months ago

I think we need to calculate the yield for both securities to find the difference, but I'm not entirely sure how to set that up.

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Louvenia

11 months ago

This is a classic time value of money problem. I'll set up the cash flows and discount them to find the additional return.

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Luther

11 months ago

I'm a little confused by the wording of the question. Do I need to calculate the yield or the total return?

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Tequila

11 months ago

No problem, I've got this. I'll just plug the numbers into the formula and solve for the additional return.

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Karon

11 months ago

Hmm, I'm a bit unsure about how to approach this. I'll need to review the formulas for calculating the return on Treasury bills and commercial paper.

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Evangelina

11 months ago

Okay, this looks straightforward. I just need to calculate the return on each investment and then find the difference.

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Lauryn

11 months ago

This is a tricky one. I'm not sure if the Agent and Resource set would be enough, or if the Mobile, Agent, and Resource set would be better. I'll have to re-read the question carefully and think it through.

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Rikki

11 months ago

This is a great question! Unit testing is so important because it helps catch bugs early on and ensures your code is working as expected. I feel confident I can explain the key reasons why it's crucial.

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Pamella

11 months ago

I remember a practice question discussing capability overlaps, and while that seems important, it may not be the main focus in a globalization context.

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Claribel

11 months ago

I remember practicing with public key cryptography, and I think it uses a pair of keys, but I'm not sure how that applies here.

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