Fight Finance

(a) 0.0400

(b) 0.0500

(c) 0.0660

(d) 0.0800

(e) 0.1321

(a) The beta of equity is 5 and the expected return on equity is 30% pa.

(b) The beta of equity is 4.2 and the expected return on equity is 26% pa.

(c) The beta of equity is 0.86 and the expected return on equity is 9.3% pa.

(d) The beta of equity is 1 and the expected return on equity is 10% pa.

(e) The beta of equity is 0.6 and the expected return on equity is 8% pa.

(a) ##V_0=\dfrac{C_t}{(1+r)^t} ##

(b) ##V_0=\dfrac{C_1}{r}.\left(1-\dfrac{1}{(1+r)^T} \right)= \sum\limits_{t=1}^T \left( \dfrac{C_t}{(1+r)^t} \right) ##

(c) ##V_0=\dfrac{C_1}{r-g}.\left(1-\left(\dfrac{1+g}{1+r}\right)^T \right)= \sum\limits_{t=1}^T \left( \dfrac{C_t.(1+g)^t}{(1+r)^t} \right) ##

(d) ##V_0=\dfrac{C_1}{r} = \sum\limits_{t=1}^\infty \left( \dfrac{C_t}{(1+r)^t} \right) ##

(e) ##V_0=\dfrac{C_1}{r-g} = \sum\limits_{t=1}^\infty \left( \dfrac{C_t.(1+g)^t}{(1+r)^t} \right) ##

(a) The APR compounding semi-annually is 3.0000% per annum.

(b) The effective 6 month rate is 1.5000% per six months.

(c) The effective annual rate is 3.0225% per annum.

(d) The effective monthly rate is 0.2500% per month.

(e) The APR compounding monthly is 2.9814% per annum.

(a) A long call option's payoff at maturity is equal to the maximum of zero or the underlying asset price at maturity minus the exercise price. ##f_\text{T,LC} = max(S_T - K, 0)##

(b) A long call option's profit is equal to the payoff at maturity less the initial option price. ##\pi_\text{LC} = max(S_T - K, 0) - c_0##

(c) The breakeven price is the underlying asset price at which a long option contract gives zero profit. When ##max(S_T - K, 0) - c_0 = 0##, then ##S_T = K+c_0##.

(d) A call option's break-even price is always more than its strike price.

(e) Call options should only be exercised at maturity if the underlying asset price is above the break-even price.

(a) 1.55 USD per GBP

(b) 120.61 JPY per USD

(c) 6.32 RMB per USD

(d) 1 USD = 1.31 CAD

(e) 0.99 CHF = 1 USD

(a) Nominal income return of 1% pa ##\left( =\dfrac{1}{100} \right)##.

(b) Nominal capital return of 0.5% pa ##\left( =\dfrac{100.5-100}{100} \right)##.

(c) Nominal total return of 1.5% pa ##\left( =\dfrac{100.5-100+1}{100} \right)##.

(d) Real income return of 0.9708738% pa##\left( =\dfrac{ 1/(1+0.03)^1}{100} \right)##.

(e) Real capital return of 0.4854369% pa ##\left( =\dfrac{ (100.5-100)/(1+0.03)^1}{100} \right) ##.

(a) The mean (expected or arithmetic average) portfolio value in one year is $1,072,508. The median (50th percentile) portfolio value in one year is $1,051,271.

(b) The annual 99% relative VaR is $391,591.

(c) The annual 99% absolute VaR is $340,320.

(d) The 98% confidence interval of portfolio values in one year ##(V_1)## is ##\$659,680 < V_1 < \$1,675,312,977##.

(e) The 98% confidence interval of continuously compounded portfolio returns over the next year ##(r_{0 \rightarrow 1})## is ##-41.6\% < r_{0 \rightarrow 1} < 51.6\%##.

(a) Debt to equity ratio.

(b) Debt to assets ratio.

(c) Book to market ratio.

(d) Price to earnings ratio.

(e) Interest coverage ratio.

(a) Australia’s dollar, AUD.

(b) The Chinese territory Hong Kong’s dollar, HKD.

(c) Mainland China’s Renminbi, RMB.

(d) Panama’s currency.

(e) Saudi Arabia’s Riyal, SAR.