For a price of $100, Carol will sell you a 5 year bond paying semiannual 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.
A project has the following cash flows. Normally cash flows are assumed to happen at the given time. But here, assume that the cash flows are received smoothly over the year. So the $105 at time 2 is actually earned smoothly from t=1 to t=2:
Project Cash Flows  
Time (yrs)  Cash flow ($) 
0  90 
1  30 
2  105 
What is the payback period of the project in years?
A home loan company advertises an interest rate of 6% pa, payable monthly. Which of the following statements about the interest rate is NOT correct? All rates are given to four decimal places.
Safe firms with low chances of bankruptcy will tend to have:
The Du Pont formula is:
###\dfrac{\text{Net Profit}}{\text{Sales}} \times \dfrac{\text{Sales}}{\text{Total Assets}} \times \dfrac{\text{Total Assets}}{\text{Owners' Equity}}###
Which of the following statements about the Du Pont formula is NOT correct?
Below is a table of the 'Riskweights for residential mortgages' as shown in APRA Basel 3 Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk January 2013.
LVR (%) 
Standard eligible mortgages 
Nonstandard eligible mortgages 


Riskweight (no mortgage insurance) % 
Riskweight (with at least 40% of the mortgage insured by an acceptable LMI) % 
Riskweight (no mortgage insurance) % 
Riskweight (with at least 40% of the mortgage insured by an acceptable LMI) % 
0 – 60 
35 
35 
50 
35 
60.01 – 80 
35 
35 
75 
50 
80.01 – 90 
50 
35 
100 
75 
90.01 – 100 
75 
50 
100 
75 
> 100.01 
100 
75 
100 
100 
A bank is considering granting a home loan to a man to buy a house worth $1.25 million using his own funds and the loan. The loan would be standard with no lenders mortgage insurance (LMI) and an LVR of 80%.
What is the minimum regulatory capital that the bank requires to grant the home loan under the Basel 3 Accord? Ignore the capital conservation buffer.
A New Zealand lady wants to calculate how many New Zealand Dollars (NZD) she needs to buy a 1 million Australian dollar (AUD) house in Sydney, Australia. The exchange rate is 0.69 USD per NZD and 0.72 USD per AUD. What is the AUD 1 million equivalent to in NZD?