# Fight Finance

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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? In the dividend discount model: $$P_0 = \dfrac{C_1}{r-g}$$ The return $r$ is supposed to be the: An expansion option is best modeled as a or option? An asset's total expected return over the next year is given by: $$r_\text{total} = \dfrac{c_1+p_1-p_0}{p_0}$$ Where $p_0$ is the current price, $c_1$ is the expected income in one year and $p_1$ is the expected price in one year. The total return can be split into the income return and the capital return. Which of the following is the expected capital return? The below screenshot of Microsoft's (MSFT) details were taken from the Google Finance website on 28 Nov 2014. Some information has been deliberately blanked out. What was MSFT's backwards-looking price-earnings ratio? You expect a nominal payment of$100 in 5 years. The real discount rate is 10% pa and the inflation rate is 3% pa. Which of the following statements is NOT correct?

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 $X_T$.

A trader sells one crude oil European style call option contract on the CME expiring in one year with an exercise price of $44 per barrel for a price of$6.64. The crude oil spot price is \$40.33. If the trader doesn’t close out her contract before maturity, then at maturity she will have the:

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?

A Malaysian man wishes to convert 1 million Malaysian Ringgit (MYR) into Indian Rupees (IND). The exchange rate is 4.2 MYR per USD and 71 IND per USD. How much is the MYR 1 million worth in IND?