Question 121 capital structure, leverage, financial distress, interest tax shield
Fill in the missing words in the following sentence:
All things remaining equal, as a firm's amount of debt funding falls, benefits of interest tax shields __________ and the costs of financial distress __________.
Which one of the following will increase the Cash Flow From Assets in this year for a tax-paying firm, all else remaining constant?
Fundamentalists who analyse company financial reports and news announcements (but who don't have inside information) will make positive abnormal returns if:
Which of the following investable assets are NOT suitable for valuation using PE multiples techniques?
A moped is a bicycle with pedals and a little motor that can be switched on to assist the rider. Mopeds are useful for quick transport using the motor, and for physical exercise when using the pedals unassisted. This offers the rider:
Which of the below formulas gives the profit ##(\pi)## from being long a call option? Let the underlying asset price at maturity be ##S_T##, the exercise price be ##X_T## and the option price be ##f_{LC,0}##. Note that ##S_T##, ##X_T## and ##f_{LC,0}## are all positive numbers.
Question 744 income and capital returns, real and nominal returns and cash flows, inflation
If someone says "my shares rose by 10% last year", what do you assume that they mean? The effective annual:
Use the below information to value a levered company with annual perpetual cash flows from assets that grow. The next cash flow will be generated in one year from now. Note that ‘k’ means kilo or 1,000. So the $30k is $30,000.
Data on a Levered Firm with Perpetual Cash Flows | ||
Item abbreviation | Value | Item full name |
##\text{OFCF}## | $30k | Operating free cash flow |
##g## | 1.5% pa | Growth rate of OFCF |
##r_\text{D}## | 4% pa | Cost of debt |
##r_\text{EL}## | 16.3% pa | Cost of levered equity |
##D/V_L## | 80% pa | Debt to assets ratio, where the asset value includes tax shields |
##t_c## | 30% | Corporate tax rate |
##n_\text{shares}## | 100k | Number of shares |
Which of the following statements is NOT correct?
Question 851 labour force, no explanation
Below is a table showing some figures about the Australian labour force.
Australian Labour Force and Employment Data | |
April 2017 Seasonally Adjusted figures | |
Employed persons ('000) | 12 061.9 |
Unemployed persons ('000) | 751.4 |
Unemployment rate (%) | 5.9 |
Participation rate (%) | 64.8 |
Source: ABS 6202.0 Labour Force, Australia, Apr 2017
What do you estimate is the size of working age population in thousands (‘000)?