Below are 4 option graphs. Note that the y-axis is payoff at maturity (T). What options do they depict? List them in the order that they are numbered

A project has the following cash flows:

Project Cash Flows | |

Time (yrs) | Cash flow ($) |

0 | -90 |

1 | 30 |

2 | 105 |

The required return of a project is 10%, given as an effective annual rate. Assume that the cash flows shown in the table are paid all at once at the given point in time.

What is the Profitability Index (PI) of the project?

**Question 407** income and capital returns, inflation, real and nominal returns and cash flows

A stock has a **real** expected total return of **7**% pa and a real expected capital return of **2**% pa.

Inflation is expected to be **2**% pa. All rates are given as effective annual rates.

What is the **nominal** expected total return, capital return and dividend yield? The answers below are given in the same order.

The boss of WorkingForTheManCorp has a wicked (and unethical) idea. He plans to pay his poor workers one week late so that he can get more interest on his cash in the bank.

Every week he is supposed to pay his 1,000 employees $1,000 each. So $**1** million is paid to employees every week.

The boss was just about to pay his employees today, until he thought of this idea so he will actually pay them one week (**7** days) later for the work they did last week and every week in the future, forever.

Bank interest rates are **10**% pa, given as a real effective annual rate. So ##r_\text{eff annual, real} = 0.1## and the real effective weekly rate is therefore ##r_\text{eff weekly, real} = (1+0.1)^{1/52}-1 = 0.001834569##

All rates and cash flows are real, the inflation rate is **3**% pa and there are **52** weeks per year. The boss will always pay wages one week late. The business will operate forever with constant real wages and the same number of employees.

What is the net present value (**NPV**) of the boss's decision to pay later?

The below screenshot of Commonwealth Bank of Australia's (CBA) details were taken from the Google Finance website on 7 Nov 2014. Some information has been deliberately blanked out.

What was CBA's backwards-looking price-earnings ratio?

**Question 639** option, option payoff at maturity, no explanation

Which of the below formulas gives the payoff ##(f)## at maturity ##(T)## from being **short** a **put** option? Let the underlying asset price at maturity be ##S_T## and the exercise price be ##X_T##.

Mr Blue, Miss Red and Mrs Green are people with different utility functions. Which of the statements about the 3 utility functions is **NOT** correct?

**Question 776** market efficiency, systematic and idiosyncratic risk, beta, income and capital returns

Which of the following statements about returns is **NOT** correct? A stock's:

**Question 778** CML, systematic and idiosyncratic risk, portfolio risk, CAPM, no explanation

The capital market line (CML) is shown in the graph below. The total standard deviation is denoted by σ and the expected return is μ. Assume that markets are efficient so all assets are fairly priced.

Which of the below statements is **NOT** correct?

**Question 852** gross domestic product growth, inflation, employment, no explanation

When the economy is booming (in an upswing), you tend to see: