Fight Finance

(a) Bond A will have a higher price.

(b) Bond B will have a higher price.

(c) Bonds A and B will have the same price.

(d) The higher priced bond can't be determined without knowing their yields.

(e) The higher priced bond can't be determined without knowing the inflation rate.

A timing option is best modeled as a or option?

(a) Investment decision.

(b) Financing decision.

(c) Working capital decision.

(d) Payout policy decision.

(e) Capital or labour decision.

(a) Annualised percentage rate compounding per month.

(b) Effective monthly rate compounding per year.

(c) Annualised percentage rate compounding per year.

(d) Effective annual rate compounding per year.

(e) Annualised percentage rate compounding semi-annually.

(a) 230.258509% pa

(b) 10.536052% pa

(c) 10.517092% pa

(d) 10.468982% pa

(e) 9.531018% pa

(a) 9.7617696% is the APR compounding semi-annually ##(r_\text{apr comp 6mth})##

(b) 9.5689685% is the APR compounding monthly ##(r_\text{apr comp monthly})##

(c) 9.6454756% is the APR compounding daily ##(r_\text{apr comp daily})##

(d) 9.5310182% is the APR compounding per second ##(r_\text{apr comp per second})##

(e) 9.5310180% is the continuously compounded rate per annum ##(r_\text{cc annual})##

(a) Expected total return will equal its required total return if the stock is fairly priced.

(b) Expected total return will be less than its required total return if the stock is over-priced.

(c) Required total return should be higher than the risk free government bond yield if the stock has a positive beta.

(d) Required total return depends on its total variance, required capital return depends on systematic variance and the dividend yield depends on idiosyncratic variance.

(e) Expected capital return equals the expected total return less whatever the management decide that they will pay as an income return (which is the dividend yield).

(a) A normally distributed variable’s mean, median and mode are all expected to be equal.

(b) A log-normally distributed variable’s mean, median and mode are all expected to be different. Mean > median > mode.

(c) Future stock prices ##(P_t )## are often assumed to be log-normally distributed.

(d) Stocks’ annual net discrete returns ##(P_t/P_0-1)## must be normally distributed when stock prices ##(P_t)## are log-normally distributed.

(e) The total area under a probability density function (pdf) is always one.

(a) Adam and Bella can pick zero dates and 10 coconuts in one hour.

(b) Adam and Bella could pick 2 dates and 8.8 coconuts in one hour.

(c) Adam and Bella could pick 5 dates and 7 coconuts in one hour.

(d) Adam and Bella could pick 8 dates and 5.2 coconuts in one hour.

(e) Adam and Bella could pick 11 dates and zero coconuts in one hour.