Use Of All Ordinances Index For Estimating Return In Australian Share Market

Question

The rate of return for an Australian Commonwealth Government Treasury Bond is given as 4% per annum. The yearly return for the Australian share market is given as 12%. Suppose a listed company has a beta value of 0.5.

(a) Explain how the All Ordinaries Index can be used to estimate the market return of the Australian share market.

(b) Explain why Australian Commonwealth Government Treasury Bonds are considered to be risk free.

(c) In the Budget on May 11, 2010, did the Australian Commonwealth Government announce it had budgeted for a deficit in the 2010-2011 financial year? If it did, how is the Government going to fund the deficit? What is the projected size of this Budget deficit? What is the projected revenue and expenditure? Did the budget have any immediate effect on the Australian share market? Give at least one reference

Summary

The question belongs to Finance and it discusses about how All Ordinances Index can be used to estimate return in Australian share market and why Australian Commonwealth Government Treasury Bonds are considered to be risk free.

Total Word Count 262