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A wholesale glass importer offers credit to its customers. Customers are given 30 days to pay for their goods, but if they pay within 5 days they will get a 1% discount.

What is the effective interest rate implicit in the discount being offered? Assume 365 days in a year and that all customers pay on either the 5th day or the 30th day. All rates given below are effective annual rates.

You just signed up for a 30 year interest-only mortgage with monthly payments of 3,000 per month. The interest rate is 6% pa which is not expected to change. How much did you borrow? After 15 years, just after the 180th payment at that time, how much will be owing on the mortgage? The interest rate is still 6% and is not expected to change. Remember that the mortgage is interest-only and that mortgage payments are paid in arrears (at the end of the month). Which of the following statements about risk free government bonds is NOT correct? Hint: Total return can be broken into income and capital returns as follows: \begin{aligned} r_\text{total} &= \frac{c_1}{p_0} + \frac{p_1-p_0}{p_0} \\ &= r_\text{income} + r_\text{capital} \end{aligned} The capital return is the growth rate of the price. The income return is the periodic cash flow. For a bond this is the coupon payment. Government bonds currently have a return of 5%. A stock has a beta of 2 and the market return is 7%. What is the expected return of the stock? A wholesale store offers credit to its customers. Customers are given 60 days to pay for their goods, but if they pay immediately they will get a 1.5% discount. What is the effective interest rate implicit in the discount being offered? Assume 365 days in a year and that all customers pay either immediately or the 60th day. All of the below answer choices are given as effective annual interest rates. In the dividend discount model: $$P_0 = \dfrac{C_1}{r-g}$$ The return $r$ is supposed to be the: The below screenshot of Commonwealth Bank of Australia's (CBA) details were taken from the Google Finance website on 7 Nov 2014. Some information has been deliberately blanked out. What was CBA's approximate payout ratio over the 2014 financial year? Note that the firm's interim and final dividends were1.83 and $2.18 respectively over the 2014 financial year. Which of the following statements about the capital and income returns of an interest-only loan is correct? Assume that the yield curve (which shows total returns over different maturities) is flat and is not expected to change. An interest-only loan's expected: Below is a table of the 'Risk-weights for residential mortgages' as shown in APRA Basel 3 Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk January 2013.  LVR (%) Standard eligible mortgages Non-standard eligible mortgages Risk-weight (no mortgage insurance) % Risk-weight (with at least 40% of the mortgage insured by an acceptable LMI) % Risk-weight (no mortgage insurance) % Risk-weight (with at least 40% of the mortgage insured by an acceptable LMI) % 0 – 60 35 35 50 35 60.01 – 80 35 35 75 50 80.01 – 90 50 35 100 75 90.01 – 100 75 50 100 75 > 100.01 100 75 100 100 A bank is considering granting a home loan to a man to buy a house worth$1.25 million using his own funds and the loan. The loan would be standard with no lenders mortgage insurance (LMI) and an LVR of 80%.

What is the minimum regulatory capital that the bank requires to grant the home loan under the Basel 3 Accord? Ignore the capital conservation buffer.

The arithmetic average continuously compounded or log gross discrete return (AALGDR) on the ASX200 accumulation index over the 24 years from 31 Dec 1992 to 31 Dec 2016 is 9.49% pa.

The arithmetic standard deviation (SDLGDR) is 16.92 percentage points pa.

Assume that the log gross discrete returns are normally distributed and that the above estimates are true population statistics, not sample statistics, so there is no standard error in the sample mean or standard deviation estimates. Also assume that the standardised normal Z-statistic corresponding to a one-tail probability of 2.5% is exactly -1.96.

If you had a \$1 million fund that replicated the ASX200 accumulation index, in how many years would the mode dollar value of your fund first be expected to lie outside the 95% confidence interval forecast?

Note that the mode of a log-normally distributed future price is: $P_{T \text{ mode}} = P_0.e^{(\text{AALGDR} - \text{SDLGDR}^2 ).T}$