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Question 168  bond pricing

A four year bond has a face value of $100, a yield of 6% and a fixed coupon rate of 12%, paid semi-annually. What is its price?

Question 226  CFFA

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

World Bar
Income Statement for
year ending 30th June 2013
Sales 300
COGS 150
Operating expense 50
Depreciation 40
Interest expense 10
Taxable income 50
Tax at 30% 15
Net income 35
World Bar
Balance Sheet
as at 30th June 2013 2012
  $m $m
Current assets 200 230
    Cost 400 400
    Accumul. depr. 75 35
    Carrying amount 325 365
Total assets 525 595
Current liabilities 150 205
Non-current liabilities 235 250
Owners' equity
Retained earnings 100 100
Contributed equity 40 40
Total L and OE 525 595


Note: all figures above and below are given in millions of dollars ($m).

Question 287  bond pricing

A 30 year Japanese government bond was just issued at par with a yield of 1.7% pa. The fixed coupon payments are semi-annual. The bond has a face value of $100.

Six months later, just after the first coupon is paid, the yield of the bond increases to 2% pa. What is the bond's new price?

Question 541  debt terminology

Which of the following statements is NOT correct? Bond investors:

Question 625  dividend re-investment plan, capital raising

Which of the following statements about dividend re-investment plans (DRP's) is NOT correct?

Question 705  utility, risk aversion, utility function

Mr Blue, Miss Red and Mrs Green are people with different utility functions.

Which of the following statements is NOT correct?

Utility curves

Question 774  leverage, WACC, real estate

One year ago you bought a $1,000,000 house partly funded using a mortgage loan. The loan size was $800,000 and the other $200,000 was your wealth or 'equity' in the house asset.

The interest rate on the home loan was 4% pa.

Over the year, the house produced a net rental yield of 2% pa and a capital gain of 2.5% pa.

Assuming that all cash flows (interest payments and net rental payments) were paid and received at the end of the year, and all rates are given as effective annual rates, what was the total return on your wealth over the past year?

Hint: Remember that wealth in this context is your equity (E) in the house asset (V = D+E) which is funded by the loan (D) and your deposit or equity (E).

Question 805  short selling

Short selling is a way to make money from falling prices. In what order must the following steps be completed to short-sell an asset? Let Tom, Dick and Harry be traders in the share market.

  • Step P: Purchase the asset from Harry.
  • Step G: Give the asset to Tom.
  • Step W: Wait and hope that the asset price falls.
  • Step B: Borrow the asset from Tom.
  • Step S: Sell the asset to Dick.

Select the statement with the correct order of steps.

Question 945  stock split, bonus issue, stock dividend

A 3-for-2 stock split is equivalent to a 1-for-2 bonus issue or a 200% stock dividend. or ?

Question 953  option, out of the money option

If a call option is out-of-the-money, then the spot price (##S_0##) is than, than or to the call option's strike price (##K_T##)?