A share was bought for $4 and paid an dividend of $0.50 one year later (at t=1 year).
Just after the dividend was paid, the share price fell to $3.50 (at t=1 year). What were the total return, capital return and income returns given as effective annual rates? The answer choices are given in the same order:
##r_\text{total}##, ##r_\text{capital}##, ## r_\text{income}##
A firm has a debt-to-equity ratio of 25%. What is its debt-to-assets ratio?
Question 525 income and capital returns, real and nominal returns and cash flows, inflation
Which of the following statements about cash in the form of notes and coins is NOT correct? Assume that inflation is positive.
Notes and coins:
Question 531 bankruptcy or insolvency, capital structure, risk, limited liability
Who is most in danger of being personally bankrupt? Assume that all of their businesses' assets are highly liquid and can therefore be sold immediately.
Question 536 idiom, bond pricing, capital structure, leverage
The expression 'my word is my bond' is often used in everyday language to make a serious promise.
Why do you think this expression uses the metaphor of a bond rather than a share?
Question 693 boot strapping zero coupon yield, forward interest rate, term structure of interest rates
Information about three risk free Government bonds is given in the table below.
Federal Treasury Bond Data | ||||
Maturity | Yield to maturity | Coupon rate | Face value | Price |
(years) | (pa, compounding semi-annually) | (pa, paid semi-annually) | ($) | ($) |
0.5 | 3% | 4% | 100 | 100.4926 |
1 | 4% | 4% | 100 | 100.0000 |
1.5 | 5% | 4% | 100 | 98.5720 |
Based on the above government bonds' yields to maturity, which of the below statements about the spot zero rates and forward zero rates is NOT correct?
Question 743 price gains and returns over time, no explanation
How many years will it take for an asset's price to triple (increase from say $1 to $3) if it grows by 5% pa?
Question 794 option, Black-Scholes-Merton option pricing, option delta, no explanation
Which of the following quantities from the Black-Scholes-Merton option pricing formula gives the Delta of a European call option?
Where:
###d_1=\dfrac{\ln[S_0/K]+(r+\sigma^2/2).T)}{\sigma.\sqrt{T}}### ###d_2=d_1-\sigma.\sqrt{T}=\dfrac{\ln[S_0/K]+(r-\sigma^2/2).T)}{\sigma.\sqrt{T}}###What derivative position are you exposed to if you have the obligation to sell the underlying asset at maturity, so you will definitely be forced to sell the underlying asset?
A put option written on a risky non-dividend paying stock will mature in one month. As is normal, assume that the option's exercise price is non-zero and positive ##(K>0)## and the stock has limited liability ##(S>0)##.
Which of the following statements is NOT correct? The put option's: