For a price of $13, Carla will sell you a share which will pay a dividend of $1 in one year and every year after that forever. The required return of the stock is 10% pa.

Bonds A and B are issued by the same Australian company. Both bonds yield 7% pa, and they have the same face value ($100), maturity, seniority, and payment frequency.

The only difference is that bond A pays coupons of 10% pa and bond B pays coupons of 5% pa. Which of the following statements is true about the bonds' prices?

Your main expense is fuel for your car which costs $100 per month. You just refueled, so you won't need any more fuel for another month (first payment at t=1 month).

You have $2,500 in a bank account which pays interest at a rate of 6% pa, payable monthly. Interest rates are not expected to change.

Assuming that you have no income, in how many months time will you not have enough money to **fully** refuel your car?

**Question 578** inflation, real and nominal returns and cash flows

Which of the following statements about inflation is **NOT** correct?

**Question 659** APR, effective rate, effective rate conversion, no explanation

A home loan company advertises an interest rate of 9% pa, payable monthly. Which of the following statements about the interest rate is **NOT** correct? All rates are given with an accuracy of 4 decimal places.

A firm has a debt-to-assets ratio of **20**%. What is its debt-to-**equity** ratio?

**Question 722** mean and median returns, return distribution, arithmetic and geometric averages, continuously compounding rate

Here is a table of stock prices and returns. Which of the statements below the table is **NOT** correct?

Price and Return Population Statistics |
||||

Time | Prices | LGDR | GDR | NDR |

0 | 100 | |||

1 | 50 | -0.6931 | 0.5 | -0.5 |

2 | 100 | 0.6931 | 2 | 1 |

Arithmetic average | 0 | 1.25 | 0.25 | |

Arithmetic standard deviation | -0.6931 | 0.75 | 0.75 | |

**Question 954** option, at the money option