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Question 182  NPV, IRR, pay back period

A project's NPV is positive. Select the most correct statement:



Question 239  income and capital returns, inflation, real and nominal returns and cash flows, interest only loan

A bank grants a borrower an interest-only residential mortgage loan with a very large 50% deposit and a nominal interest rate of 6% that is not expected to change. Assume that inflation is expected to be a constant 2% pa over the life of the loan. Ignore credit risk.

From the bank's point of view, what is the long term expected nominal capital return of the loan asset?



Question 312  foreign exchange rate, American and European terms

If the current AUD exchange rate is USD 0.9686 = AUD 1, what is the American terms quote of the AUD against the USD?



Question 332  bond pricing, premium par and discount bonds

Bonds X and Y are issued by the same US company. Both bonds yield 6% pa, and they have the same face value ($100), maturity, seniority, and payment frequency.

The only difference is that bond X pays coupons of 8% pa and bond Y pays coupons of 12% pa. Which of the following statements is true?



Question 368  interest tax shield, CFFA

A method commonly seen in textbooks for calculating a levered firm's free cash flow (FFCF, or CFFA) is the following:

###\begin{aligned} FFCF &= (Rev - COGS - Depr - FC - IntExp)(1-t_c) + \\ &\space\space\space+ Depr - CapEx -\Delta NWC + IntExp(1-t_c) \\ \end{aligned}###
Does this annual FFCF or the annual interest tax shield?


Question 378  leverage, capital structure, no explanation

A levered company's required return on debt is always less than its required return on equity. or ?


Question 446  working capital decision, corporate financial decision theory

The working capital decision primarily affects which part of a business?



Question 714  return distribution, no explanation

Which of the following quantities is commonly assumed to be normally distributed?



Question 855  cash cycle, accounting ratio

The below diagram shows a firm’s cash cycle.

Diagram

Which of the following statements about companies’ cash cycle is NOT correct?



Question 905  market capitalisation of equity, PE ratio, payout ratio

The below graph shows the computer software company Microsoft's stock price (MSFT) at the market close on the NASDAQ on Friday 1 June 2018.

Based on the screenshot above, which of the following statements about MSFT is NOT correct? MSFT's: