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Bonds X and Y are issued by the same US company. Both bonds yield 10% pa, and they have the same face value ($100), maturity, seniority, and payment frequency. The only difference is that bond X and Y's coupon rates are 8 and 12% pa respectively. Which of the following statements is true? The following equation is the Dividend Discount Model, also known as the 'Gordon Growth Model' or the 'Perpetuity with growth' equation. $$p_0=\frac{d_1}{r_\text{eff}-g_\text{eff}}$$ Which expression is NOT equal to the expected capital return? A timing option is best modeled as a or option? A firm has a debt-to-equity ratio of 25%. What is its debt-to-assets ratio? An investor wants to make a portfolio of two stocks A and B with a target expected portfolio return of 16% pa. • Stock A has an expected return of 8% pa. • Stock B has an expected return of 12% pa. What portfolio weights should the investor have in stocks A and B respectively? A trader buys a one year futures contract on crude oil. The contract is for the delivery of 1,000 barrels. The current futures price is$38.94 per barrel. The initial margin is $3,410 per contract, and the maintenance margin is$3,100 per contract.

What is the smallest price change that would lead to a margin call for the buyer?

Which of the following interest rate labels does NOT make sense?

Convert a 10% continuously compounded annual rate $(r_\text{cc annual})$ into an effective annual rate $(r_\text{eff annual})$. The equivalent effective annual rate is:

Calculate Australia’s GDP over the 2016 calendar year using the below table:

 Australian Gross Domestic Product Components A\$ billion, 2016 Calendar Year from 1 Jan 2016 to 31 Dec 2016 inclusive Consumption Investment Government spending Exports Imports 971 421 320 328 344

Source: ABS 5206.0 Australian National Accounts: National Income, Expenditure and Product. Table 3. Expenditure on Gross Domestic Product (GDP), Current prices.

Australia’s GDP was:

The market's expected total return is 10% pa and the risk free rate is 5% pa, both given as effective annual rates.

A stock has a beta of 0.7.

What do you think will be the stock's expected return over the next year, given as an effective annual rate?