Katya offers to pay you $10 at the end of every year for the next 5 years (t=1,2,3,4,5) if you pay her $50 now (t=0). You can borrow and lend from the bank at an interest rate of 10% pa, given as an effective annual rate.

Ignore credit risk.

If a project's net present value (NPV) is zero, then its internal rate of return (IRR) will be:

A stock's correlation with the market portfolio increases while its total risk is unchanged. What will happen to the stock's expected return and systematic risk?

The expression 'cash is king' emphasizes the importance of having enough cash to pay your short term debts to avoid bankruptcy. Which business decision is this expression most closely related to?

A firm has a debt-to-assets ratio of **20**%. What is its debt-to-**equity** ratio?

**Question 731** DDM, income and capital returns, no explanation

In the dividend discount model (DDM), share prices fall when dividends are paid. Let the high price before the fall be called the peak, and the low price after the fall be called the trough.

###P_0=\dfrac{C_1}{r-g}###

Which of the following statements about the DDM is **NOT** correct?