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For a price of $100, Carol will sell you a 5 year bond paying semi-annual coupons of 16% pa. The face value of the bond is $100. Other bonds with similar risk, maturity and coupon characteristics trade at a yield of 12% pa.

Question 160 interest only loan

You want to buy an apartment priced at $500,000. You have saved a deposit of $50,000. The bank has agreed to lend you the $450,000 as an interest only loan with a term of 30 years. The interest rate is 6% pa and is not expected to change. What will be your monthly payments?

Question 165 DDM, PE ratio, payout ratio

For certain shares, the forward-looking Price-Earnings Ratio (##P_0/EPS_1##) is equal to the inverse of the share's total expected return (##1/r_\text{total}##). For what shares is this true?

Use the general accounting definition of 'payout ratio' which is dividends per share (DPS) divided by earnings per share (EPS) and assume that all cash flows, earnings and rates are real rather than nominal.

A company's forward-looking PE ratio will be the inverse of its total expected return on equity when it has a:

Question 257 bond pricing

A 10 year bond has a face value of $100, a yield of 6% pa and a fixed coupon rate of 8% pa, paid semi-annually. What is its price?

Question 360 CFFA

Find Ching-A-Lings Corporation's Cash Flow From Assets (CFFA), also known as Free Cash Flow to the Firm (FCFF), over the year ending 30th June 2013.

Ching-A-Lings Corp
Income Statement for
year ending 30th June 2013
	$m
Sales	100
COGS	20
Depreciation	20
Rent expense	11
Interest expense	19
Taxable Income	30
Taxes at 30%	9
Net income	21

Ching-A-Lings Corp
Balance Sheet
as at 30th June	2013	2012
	$m	$m
Inventory	49	38
Trade debtors	14	2
Rent paid in advance	5	5
PPE	400	400
Total assets	468	445

Trade creditors	4	10
Bond liabilities	200	190
Contributed equity	145	145
Retained profits	119	100
Total L and OE	468	445

Note: All figures are given in millions of dollars ($m).

The cash flow from assets was:

Question 403 PE ratio, no explanation

Which of the following investable assets is the LEAST suitable for valuation using PE multiples techniques?

Question 526 real and nominal returns and cash flows, inflation, no explanation

How can a nominal cash flow be precisely converted into a real cash flow?

Question 629 yield curve, forward interest rate

Which of the following statements about yield curves is NOT correct?

Question 651 future

Which of the following statements about futures is NOT correct?

Question 951 option, in the money option