Fight Finance

(a) a ten-year bond with a $4,000 face value whose yield to maturity is 6.0% and coupon rate is 5.9% paid semi-annually.

(b) a fifteen-year bond with a $10,000 face value whose yield to maturity is 8.0% and coupon rate is 7.8% paid semi-annually.

(c) a five-year bond with a $2,000 face value whose yield to maturity is 7.0% and coupon rate is 7.2% paid semi-annually.

(d) a two-year bond with a $50,000 face value whose yield to maturity is 5.2% and coupon rate is 5.2% paid semi-annually.

(e) None of the above bonds are premium bonds.

(a) Expected future total return of the market price of equity.

(b) Expected future total return of the book price of equity.

(c) Actual historical total return on the market price of equity.

(d) Actual historical total return on the book price of equity.

(e) Actual historical return on equity (ROE) defined as (Net Income / Owners Equity).

(a) A bullet loan has no interest payments but it does have a face value. Therefore it's a discount loan.

(b) A fully amortising loan has interest payments but does not have a face value. Therefore it's a premium loan.

(c) An interest only loan has interest payments and its price and face value are equal. Therefore it's a par loan.

(d) A zero coupon bond has no coupon payments but it does have a face value. Therefore it's a premium bond.

(e) A balloon loan has interest payments and its face value is more than its price. Therefore it's a discount loan.

(a) Positive income return.

(b) Positive capital return.

(c) Negative income return.

(d) Negative capital return.

(e) Positive total return.

(a) 24.28168% pa

(b) 24% pa

(c) 22.126907% pa

(d) 19.697716% pa

(e) 16.970563% pa

You deposit cash into your bank account. Have you or debt?

It's possible for both parties in a futures or forward contract to be hedging, so neither are speculating. or ?

(a) You have a debt asset.

(b) The bank sold you its promise to pay back interest and principal payments.

(c) The bank is exposed to your credit risk, it’s afraid that you’ll default on your debt.

(d) The interest income you’re paid is taxable income for you.

(e) The interest expense that the bank pays is tax-deductible for the bank.

(a) The firm currently has 60m shares on issue and will need to sell 25m new shares in the rights issue.

(b) The company should do a 5-for-12 rights issue.

(c) After the rights issue the market share price will be $4.705882.

(d) The value of one right would be $0.705882.

(e) If you don't take part in the rights issue and it is non-renounceable, you will lose $0.705882 per share.

(a) Australia’s GDP deflator.

(b) Australia’s CPI.

(c) New Zealand’s CPI.

(d) China’s GDP deflator.

(e) China’s CPI.