For a price of $13, Carla will sell you a share paying a dividend of $1 in one year and every year after that forever. The required return of the stock is 10% pa.
Stock A and B's returns have a correlation of 0.3. Which statement is NOT correct?
A firm has a debt-to-assets ratio of 50%. The firm then issues a large amount of debt to raise money for new projects of similar market risk to the company's existing projects. Assume a classical tax system. Which statement is correct?
Find the sample standard deviation of returns using the data in the table:
| Stock Returns | |
| Year | Return pa |
| 2008 | 0.3 |
| 2009 | 0.02 |
| 2010 | -0.2 |
| 2011 | 0.4 |
The returns above and standard deviations below are given in decimal form.
Which of the following investable assets are NOT suitable for valuation using PE multiples techniques?
Question 383 Merton model of corporate debt, real option, option
In the Merton model of corporate debt, buying a levered company's debt is equivalent to buying the company's assets and:
What is the covariance of a variable X with a constant C?
The cov(X, C) or ##\sigma_{X,C}## equals:
Question 739 real and nominal returns and cash flows, inflation
There are a number of different formulas involving real and nominal returns and cash flows. Which one of the following formulas is NOT correct? All returns are effective annual rates. Note that the symbol ##\approx## means 'approximately equal to'.
Which one of the following businesses is likely to be a public company in Australia, judging by its name?
A stock's returns are normally distributed with a mean of 10% pa and a standard deviation of 20 percentage points pa. What is the 95% confidence interval of returns over the next year? Note that the Z-statistic corresponding to a one-tail:
- 90% normal probability density function is 1.282.
- 95% normal probability density function is 1.645.
- 97.5% normal probability density function is 1.960.
The 95% confidence interval of annual returns is between: