Task 6

a) Explain 2 differences between bonds and shares.

b) Homeshare rents out various newly built properties to low-income families. It has recently rented a flat to a client for £9,000 per year.

A discount rate of 4% is used by Homeshare. Calculate the present value of this rental income assuming it is expected to continue in perpetuity and there will be:

i) No growth in annual rental income

ii) 1.5% growth in rental income.

c) Explain what is meant Market Risk and by Specific risk. How can an investor reduce these risks? 

Final-MBF-Summative-data-for-students