Fight Finance

(a) Is the stock's required return.

(b) Is the stock's expected total return.

(c) Is the stock's expected dividend return.

(d) Is the stock's expected real yield.

(e) Should be less than the expected GDP growth rate of the country where the company does business.

(a) $13,369,963.37

(b) $6,400,000.00

(c) $985,735.05

(d) $985,421.17

(e) $156,250.00

(a) Cash available to distribute to creditors and stockholders.

(b) Cash flow to creditors minus cash flow to stockholders.

(c) Net income (or earnings) plus depreciation plus interest expense.

(d) Net income minus the increase in net working capital.

(e) Net income minus net capital spending minus the increase in net working capital.

(a) Bonds X and Y are premium bonds.

(b) Bonds X and Y are discount bonds.

(c) Bond X is a discount bond but bond Y is a premium bond.

(d) Bond X is a premium bond but bond Y is a discount bond.

(e) Bonds X and Y are par bonds.

(a) Competition.

(b) Opportunity costs.

(c) Separation of the investment and financing decisions.

(d) Diversification.

(e) The stand-alone principle, incremental cash flows and sunk costs.

(a) -76.92%,   333.33%

(b) -70%,   333.33%

(c) -70%, 233.33%

(d) -57.14%,   233.33%

(e) 233.33%,   -70%

(a) Buy an investment property with low expected future capital gains and high rental income, funded using a low proportion of debt (mortgage loan);

(b) Rent the investment property to a tenant;

(c) Negative gearing is achieved when the property investment’s annual taxable profit is negative, due to the loan’s interest expense being greater than the net rent (rental revenue less the renting expenses such as maintenance);

(d) Deduct the property’s income loss from the investor’s separate personal wage from labour. This means that the investor will pay less personal income tax than if they didn’t make the levered property investment;

(e) The investment property will be a positive-NPV investment if the capital gains are greater than the income losses on an after-tax, risk-adjusted, present-value basis.

(a) The Macaulay duration of the bond is 22 years.

(b) If yields-to-maturity suddenly fell by 1 percentage point then bond prices would suddenly rise by 20% or more.

(c) If yields-to-maturity suddenly rose by 2 percentage points then bond prices would suddenly fall by 40% or less.

(d) If the bond is a zero-coupon bond then its maturity is 20 years.

(e) The modified-duration-price-change formula assumes parallel shifts in the yield curve.

(a) Announcement date

(b) Last cum-dividend date

(c) Ex-dividend date

(d) Record date

(e) Payment date