Fight Finance

(a) Only III is true.

(b) Only II and III are true.

(c) Only I, II and III are true.

(d) Only IV is true.

(e) Either I, II and III are true, or IV is true, or they are all true.

(a) Illiquid small private companies.

(b) Exchange-listed companies operating in stagnant industries with negative growth prospects.

(c) Exchange-listed companies expected to have temporarily high earnings over the next year, but with lower earnings later.

(d) Exchange-listed companies operating in high-risk industries with very high required returns on equity.

(e) Exchange-listed companies whose assets include a very large proportion of cash.

An abandonment option is best modeled as a or option?

(a) The firm's enterprise value is less than its total asset value.

(b) The firm's enterprise value beta is higher than the total asset value beta.

(c) The enterprise value's weighted average cost of capital (WACC) is higher than the total asset value's WACC.

(d) The enterprise value divided by the number of shares equals the share price.

(e) The total asset value less the market value of debt, all divided by the number of shares, equals the share price.

(a) Competition.

(b) Opportunity costs.

(c) Separation of the investment and financing decisions.

(d) Diversification.

(e) The stand-alone principle, incremental cash flows and sunk costs.

(a) Long a future.

(b) Short a future.

(c) Long a put.

(d) Short a put.

(e) Short a call.

(a) Options are always worth more than or equal to equivalent European-style options.

(b) Call options on dividend-paying stocks should sometimes be exercised just before the dividend.

(c) Put options on dividend-paying stocks should sometimes be exercised just after the dividend.

(d) Call options should be exercised now if the intrinsic option value ##(S-K)## is greater than the expected present value of the option’s future payoffs.

(e) Put options should be exercised now if the intrinsic option value ##(K-S)## is less than the expected present value of the option’s future payoffs.

(a) Earnings per share (EPS) is $3.60.

(b) Dividend per share is $1.68.

(c) Payout ratio is 53.27%.

(d) The market value of equity is $774.39 billion.

(e) Number of shares outstanding is 7.68 billion.

(a) Simple annual rates.

(b) Effective annual rates.

(c) Annualised percentage rates compounding per month

(d) Annualised percentage rates compounding semi-annually

(e) Continuously compounded annual rates.

(a) NZD 496,800

(b) NZD 958,333

(c) NZD 1,043,478

(d) NZD 2,012,882

(e) NZD 2,971,216