Fight Finance

Would you like to her bond or politely ?

(a) The payback period is negative.

(b) The project's IRR is negative.

(c) The project's IRR is less than its required return.

(d) The project's IRR is more than its required return.

(e) The project's IRR is equal to its required return.

(a) ##V_0 = \dfrac{C_1}{r} \left(1-\dfrac{1}{(1+r)^T} \right) ##

(b) ##V_0 = \dfrac{C_1 \left(1-\dfrac{1}{(1+r)^T} \right)}{r}##

(c) ##V_0 = C_1\dfrac{\left(1-(1+r)^{-T} \right)}{r}##

(d) ##V_0 = C_1 \left(1-(1+r)^{-T} \right) r^{-1}##

(e) ##V_0 = C_1 \left(r^{-1}-(1+r)^{-T-1} \right)##

(a) 16 years

(b) 14 years

(c) 12 years

(d) 10 years

(e) 8 years

(a) The nominal cash flow of $100 in 5 years is equivalent to a real cash flow of $86.2609 in 5 years. This means that $86.2609 will buy the same amount of goods and services now as $100 will buy in 5 years.

(b) The real discount rate of 10% pa is equivalent to a nominal discount rate of 13.3333% pa.

(c) The nominal price of goods and services will increase by 3% every year.

(d) The real price of goods and services will increase by 3% every year.

(e) The present value of your payment will increase by the nominal discount rate every year.

(a) Borrow $636.3636 and use it to buy 0.9091 ounces of gold right now (t=0). Then pay back the loan with $700 at the end (t=1).

(b) Borrow $700 and use it to buy 1 ounce of gold right now (t=0). Then pay back the loan with $770 at the end (t=1).

(c) Borrow $727.2727 and use it to buy 1 ounce of gold right now (t=0). Then pay back the loan with $800 at the end (t=1).

(d) Borrow $800 and use it to buy 1.1039 ounces of gold right now (t=0). Then pay back the loan with $880 at the end (t=1).

(e) Borrow $880 and use it to buy 1 ounce of gold right now (t=0). Then pay back the loan with $800 at the end (t=1).

(a) Nominal income return of 1% pa ##\left( =\dfrac{1}{100} \right)##.

(b) Nominal capital return of 0.5% pa ##\left( =\dfrac{100.5-100}{100} \right)##.

(c) Nominal total return of 1.5% pa ##\left( =\dfrac{100.5-100+1}{100} \right)##.

(d) Real income return of 0.9708738% pa##\left( =\dfrac{ 1/(1+0.03)^1}{100} \right)##.

(e) Real capital return of 0.4854369% pa ##\left( =\dfrac{ (100.5-100)/(1+0.03)^1}{100} \right) ##.

(a) Inflation rate.

(b) Nominal GDP growth rate.

(c) Real GDP growth rate.

(d) Nominal total return on the share market index.

(e) Real total return on the share market index.

(a) A normally distributed variable’s mean, median and mode are all expected to be equal.

(b) A log-normally distributed variable’s mean, median and mode are all expected to be different. Mean > median > mode.

(c) Future stock prices ##(P_t )## are often assumed to be log-normally distributed.

(d) Stocks’ annual net discrete returns ##(P_t/P_0-1)## must be normally distributed when stock prices ##(P_t)## are log-normally distributed.

(e) The total area under a probability density function (pdf) is always one.

(a) Borrowed in their own domestic currency, for example a Thai business borrowing in Thai Baht.

(b) Borrowed in US Dollars.

(c) Lent in their own domestic currency, for example a Thai business lending in Thai Baht.

(d) Lent in US Dollars.