# Fight Finance

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An 'interest rate' is the same thing as a 'yield'. or ?

A firm wishes to raise $8 million now. They will issue 7% pa semi-annual coupon bonds that will mature in 10 years and have a face value of$100 each. Bond yields are 10% pa, given as an APR compounding every 6 months, and the yield curve is flat.

How many bonds should the firm issue?

Find Piano Bar's Cash Flow From Assets (CFFA), also known as Free Cash Flow to the Firm (FCFF), over the year ending 30th June 2013.

 Piano Bar Income Statement for year ending 30th June 2013 $m Sales 310 COGS 185 Operating expense 20 Depreciation 15 Interest expense 10 Income before tax 80 Tax at 30% 24 Net income 56  Piano Bar Balance Sheet as at 30th June 2013 2012$m $m Assets Current assets 240 230 PPE Cost 420 400 Accumul. depr. 50 35 Carrying amount 370 365 Total assets 610 595 Liabilities Current liabilities 180 190 Non-current liabilities 290 265 Owners' equity Retained earnings 90 90 Contributed equity 50 50 Total L and OE 610 595 Note: all figures are given in millions of dollars ($m).

An 'interest only' loan can also be called a:

Will the price of a call option on equity or if the standard deviation of returns (risk) of the underlying shares becomes higher?

Calculate the price of a newly issued ten year bond with a face value of $100, a yield of 8% pa and a fixed coupon rate of 6% pa, paid annually. So there's only one coupon per year, paid in arrears every year. An investor wants to make a portfolio of two stocks A and B with a target expected portfolio return of 6% pa. • Stock A has an expected return of 5% pa. • Stock B has an expected return of 10% pa. What portfolio weights should the investor have in stocks A and B respectively? You buy a house funded using a home loan. Have you or debt? An equity index is currently at 5,200 points. The 6 month futures price is 5,300 points and the total required return is 6% pa with continuous compounding. Each index point is worth$25.

What is the implied dividend yield as a continuously compounded rate per annum?

Which of the following is NOT a money market security?