Fight Finance

Courses  Tags  Random  All  Recent  Scores

Question 208  CFFA

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

UniBar Corp
Income Statement for
year ending 30th June 2013
  $m
Sales 80
COGS 40
Operating expense 15
Depreciation 10
Interest expense 5
Income before tax 10
Tax at 30% 3
Net income 7
 
UniBar Corp
Balance Sheet
as at 30th June 2013 2012
  $m $m
Assets
Current assets 120 90
PPE    
    Cost 360 320
    Accumul. depr. 40 30
    Carrying amount 320 290
Total assets 440 380
 
Liabilities
Current liabilities 110 60
Non-current liabilities 190 180
Owners' equity
Retained earnings 95 95
Contributed equity 45 45
Total L and OE 440 380
 

 

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



Question 237  WACC, Miller and Modigliani, interest tax shield

Which of the following discount rates should be the highest for a levered company? Ignore the costs of financial distress.



Question 271  CAPM, option, risk, systematic risk, systematic and idiosyncratic risk

All things remaining equal, according to the capital asset pricing model, if the systematic variance of an asset increases, its required return will increase and its price will decrease.
If the idiosyncratic variance of an asset increases, its price will be unchanged.

What is the relationship between the price of a call or put option and the total, systematic and idiosyncratic variance of the underlying asset that the option is based on? Select the most correct answer.

Call and put option prices increase when the:



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 323  foreign exchange rate, monetary policy, American and European terms

The market expects the Reserve Bank of Australia (RBA) to increase the policy rate by 25 basis points at their next meeting.

As expected, the RBA increases the policy rate by 25 basis points.

What do you expect to happen to Australia's exchange rate in the short term? The Australian dollar will:



Question 344  CFFA, capital budgeting

A new company's Firm Free Cash Flow (FFCF, same as CFFA) is forecast in the graph below.

Image of option graphs

To value the firm's assets, the terminal value needs to be calculated using the perpetuity with growth formula:

###V_{\text{terminal, }t-1} = \dfrac{FFCF_{\text{terminal, }t}}{r-g}###

Which point corresponds to the best time to calculate the terminal value?



Question 404  income and capital returns, real estate

One and a half years ago Frank bought a house for $600,000. Now it's worth only $500,000, based on recent similar sales in the area.

The expected total return on Frank's residential property is 7% pa.

He rents his house out for $1,600 per month, paid in advance. Every 12 months he plans to increase the rental payments.

The present value of 12 months of rental payments is $18,617.27.

The future value of 12 months of rental payments one year in the future is $19,920.48.

What is the expected annual rental yield of the property? Ignore the costs of renting such as maintenance, real estate agent fees and so on.



Question 636  option, option payoff at maturity, no explanation

Which of the below formulas gives the payoff ##(f)## at maturity ##(T)## from being long a call option? Let the underlying asset price at maturity be ##S_T## and the exercise price be ##X_T##.



Question 814  expected and historical returns

If future required returns rise, and future expected cash flows remain the same, then prices will , or remain the ?


Question 829  option, future, delta, gamma, theta, no explanation

Below are some statements about futures and European-style options on non-dividend paying stocks. Assume that the risk free rate is always positive. Which of these statements is NOT correct? All other things remaining equal: