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Question 317  foreign exchange rate, American and European terms

If the USD appreciates against the AUD, the European terms quote of the AUD will or ?



Question 376  leverage, capital structure, no explanation

Interest expense on debt is tax-deductible, but dividend payments on equity are not. or ?


Question 563  correlation

What is the correlation of a variable X with itself?

The corr(X, X) or ##\rho_{X,X}## equals:



Question 719  mean and median returns, return distribution, arithmetic and geometric averages, continuously compounding rate

A stock has an arithmetic average continuously compounded return (AALGDR) of 10% pa, a standard deviation of continuously compounded returns (SDLGDR) of 80% pa and current stock price of $1. Assume that stock prices are log-normally distributed. The graph below summarises this information and provides some helpful formulas.

graph

In one year, what do you expect the median and mean prices to be? The answer options are given in the same order.



Question 764  bond pricing, no explanation

A 4.5% fixed coupon Australian Government bond was issued at par in mid-April 2009. Coupons are paid semi-annually in arrears in mid-April and mid-October each year. The face value is $1,000. The bond will mature in mid-April 2020, so the bond had an original tenor of 11 years.

Today is mid-September 2015 and similar bonds now yield 1.9% pa.

What is the bond's new price? Note: there are 10 semi-annual coupon payments remaining from now (mid-September 2015) until maturity (mid-April 2020); both yields are given as APR's compounding semi-annually; assume that the yield curve was flat before the change in yields, and remained flat afterwards as well.



Question 814  expected and historical returns

If future required returns rise, and future expected cash flows remain the same, then prices will , or remain the ?


Question 829  option, future, delta, gamma, theta, no explanation

Below are some statements about futures and European-style options on non-dividend paying stocks. Assume that the risk free rate is always positive. Which of these statements is NOT correct? All other things remaining equal:



Question 837  option, put call parity

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



Question 862  yield curve, bond pricing, bill pricing, monetary policy, no explanation

Refer to the below graph when answering the questions.

Graph

Which of the following statements is NOT correct?



Question 919  duration, bond convexity

Which of the following statements about bond convexity is NOT correct?