**Question 218** NPV, IRR, profitability index, average accounting return

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

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 412** enterprise value, no explanation

A large proportion of a levered firm's assets is cash held at the bank. The firm is financed with half equity and half debt.

Which of the following statements about this firm's enterprise value (EV) and total asset value (V) is **NOT** correct?

The saying "buy low, sell high" suggests that investors should make a:

**Question 513** stock split, reverse stock split, stock dividend, bonus issue, rights issue

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

**Question 522** income and capital returns, real and nominal returns and cash flows, inflation, real estate

A residential investment property has an expected nominal total return of **6**% pa and nominal capital return of **2.5**% pa. Inflation is expected to be **2.5**% pa.

All of the above are effective **nominal** rates and investors believe that they will stay the same in perpetuity.

What are the property's expected **real** total, capital and income returns?

The answer choices below are given in the same order.

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 739** real and nominal returns and cash flows, inflation

There are a number of different formulas involving real and nominal returns and cash flows. Which one of the following formulas is **NOT** correct? All returns are effective annual rates. Note that the symbol ##\approx## means 'approximately equal to'.

**Question 832** option, Black-Scholes-Merton option pricing, no explanation

A **12** month European-style **call** option with a strike price of $**11** is written on a dividend paying stock currently trading at $**10**. The dividend is paid annually and the next dividend is expected to be $**0.40**, paid in **9** months. The risk-free interest rate is **5**% pa continuously compounded and the standard deviation of the stock’s continuously compounded returns is **30**% pa. The stock's continuously compounded returns are normally distributed. Using the Black-Scholes-Merton option valuation model, determine which of the following statements is **NOT** correct.

Being long a call and short a put which have the same exercise prices and underlying stock is equivalent to being: