# Fight Finance

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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.

Would you like to her bond or politely ?

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?

If the AUD appreciates against the USD, the European terms quote of the AUD will or ?

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.

You owe money. Are you a or a ?

It's possible for both parties in a futures or forward contract to be hedging, so neither are speculating. or ?

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 'Risk-weights 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 Non-standard eligible mortgages Risk-weight (no mortgage insurance) % Risk-weight (with at least 40% of the mortgage insured by an acceptable LMI) % Risk-weight (no mortgage insurance) % Risk-weight (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?