A three year bond has a fixed coupon rate of 12% pa, paid semi-annually. The bond's yield is currently 6% pa. The face value is $100. What is its price?
Select the most correct statement from the following.
'Chartists', also known as 'technical traders', believe that:
Discounted cash flow (DCF) valuation prices assets by finding the present value of the asset's future cash flows. The single cash flow, annuity, and perpetuity equations are very useful for this.
Which of the following equations is the 'perpetuity with growth' equation?
Question 538 bond pricing, income and capital returns, no explanation
Risk-free government bonds that have coupon rates greater than their yields:
Which one of the below option and futures contracts gives the possibility of potentially unlimited gains?
Question 657 systematic and idiosyncratic risk, CAPM, no explanation
A stock's required total return will decrease when its:
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 807 market efficiency, expected and historical returns, CAPM, beta, systematic risk, no explanation
You work in Asia and just woke up. It looked like a nice day but then you read the news and found out that last night the American share market fell by 10% while you were asleep due to surprisingly poor macro-economic world news. You own a portfolio of liquid stocks listed in Asia with a beta of 1.6. When the Asian equity markets open, what do you expect to happen to your share portfolio? Assume that the capital asset pricing model (CAPM) is correct and that the market portfolio contains all shares in the world, of which American shares are a big part. Your portfolio beta is measured against this world market portfolio.
When the Asian equity market opens for trade, you would expect your portfolio value to:
A Brazilian lady wishes to convert 1 million Brazilian Real (BRL) into Chinese Renminbi (RMB, also called the Yuan or CNY). The exchange rate is 3.42 BRL per USD and 6.27 RMB per USD. How much is the BRL 1 million worth in RMB?