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Question 318 foreign exchange rate, American and European terms

The Chinese government attempts to fix its exchange rate against the US dollar and at the same time use monetary policy to fix its interest rate at a set level.

To be able to fix its exchange rate and interest rate in this way, what does the Chinese government actually do?

Adopts capital controls to prevent financial arbitrage by private firms and individuals.
Adopts the same interest rate (monetary policy) as the United States.
Fixes inflation so that the domestic real interest rate is equal to the United States' real interest rate.

Which of the above statements is or are true?

Question 330 APR, effective rate, debt terminology

Which of the following statements about effective rates and annualised percentage rates (APR's) is NOT correct?

(a) Effective rates compound once over their time period. So an effective monthly rate compounds once per month.

(b) APR's compound more than once per year. So an APR compounding monthly compounds 12 times per year. The exception is an APR that compounds annually (once per year) which is the same thing as an effective annual rate.

(c) To convert an effective rate to an APR, multiply the effective rate by the number of time periods in one year. So an effective monthly rate multiplied by 12 is equal to an APR compounding monthly.

(d) To convert an APR compounding monthly to an effective monthly rate, divide the APR by the number of months in one year (12).

(e) To convert an APR compounding monthly to an effective weekly rate, divide the APR by the number of weeks in one year (approximately 52).

Question 375 interest tax shield, CFFA

One formula for calculating a levered firm's free cash flow (FFCF, or CFFA) is to use net operating profit after tax (NOPAT).

###\begin{aligned} FFCF &= NOPAT + Depr - CapEx -\Delta NWC \\ &= (Rev - COGS - Depr - FC)(1-t_c) + Depr - CapEx -\Delta NWC \\ \end{aligned} \\###

Question 480 NPV, real estate, DDM

What type of present value equation is best suited to value a residential house investment property that is expected to pay constant rental payments forever? Note that 'constant' has the same meaning as 'level' in this context.

Question 495 risk, accounting ratio, no explanation

High risk firms in danger of bankruptcy tend to have:

Question 530 Annuity, annuity due, no explanation

You are promised 20 payments of $100, where the first payment is immediate (t=0) and the last is at the end of the 19th year (t=19). The effective annual discount rate is ##r##.

Which of the following equations does NOT give the correct present value of these 20 payments?

Question 585 option

A man just sold a call option to his counterparty, a lady. The man has just now:

Question 940 CAPM, DDM

A stock has a beta of 1.2. Its next dividend is expected to be $20, paid one year from now.

Dividends are expected to be paid annually and grow by 1.5% pa forever.

Treasury bonds yield 3% pa and the market portfolio's expected return is 7% pa. All returns are effective annual rates.

What is the price of the stock now?

Question 971 foreign exchange rate, no explanation

Suppose the current Australian exchange rate is 0.8 USD per AUD.

If you think that the AUD will appreciate against the USD, contrary to the rest of the market, how could you profit? Right now you should: