Fight Finance

(a) Positive infinity (##+\infty##)

(b) Zero (0).

(c) Less than the project's required return.

(d) More than the project's required return.

(e) Equal to the project's required return.

(a) ##D(1+r_D)##

(b) ##D/(1+r_D) ##

(c) ##D.r_D ##

(d) ##D / r_D##

(e) ##NI.r_D##

(a) 0.05696, 0.702247

(b) 0.05696, 0.238663

(c) 0.053333, 0.936329

(d) 0.040889, 0.930519

(e) 0.04, 0.930519

In a takeover deal where the offer is 100% cash, the merged firm's number of shares will be equal to the acquirer firm's original number of shares. or ?

(a) 20

(b) 10

(c) 3

(d) 2

(e) 0.5

(a) Are a lender.

(b) Issued debt.

(c) Bought debt.

(d) Are a debt holder.

(e) Own a debt asset.

(a) Historical nominal total return was 10%.

(b) Historical real total return was 10%.

(c) Expected nominal total return was 10%.

(d) Historical nominal capital return was 10%.

(e) Expected real dividend return was 10%.

(a) Options are always worth more than or equal to equivalent European-style options.

(b) Call options on dividend-paying stocks should sometimes be exercised just before the dividend.

(c) Put options on dividend-paying stocks should sometimes be exercised just after the dividend.

(d) Call options should be exercised now if the intrinsic option value ##(S-K)## is greater than the expected present value of the option’s future payoffs.

(e) Put options should be exercised now if the intrinsic option value ##(K-S)## is less than the expected present value of the option’s future payoffs.

(a) Home-production such as Grandma babysitting her grand-children for free.

(b) Production in the under-ground economy such as work paid for in cash to evade the tax authorities.

(c) Production in the wild, such as when kangaroos multiply in the bush.

(d) Goods produced and exchanged in the barter economy that are not reported to the tax authorities.

(e) Inventory build-up such as goods produced in a factory that were sold to a wholesaler but have not yet been sold to a retailer or consumer.

(a) Trade surplus was roughly zero, so Australians exported as much as they imported.

(b) Net Income was negative, so Australians paid more dividends and interest to foreigners than they received. This is probably because Australia has greater gross foreign liabilities than gross foreign assets.

(c) Current account deficit means Australians have to lend to foreigners by buying foreigners’ debt and equity which represent net capital outflows out of Australia.

(d) Net foreign equity liabilities were negative (less than zero) so Australians had positive net foreign equity assets which means that Australians owned more foreign shares than foreigners owned of Australian shares.

(e) Persistent current account deficit will make its net foreign liabilities greater and greater.