The required return of a project is 10%, given as an effective annual rate. Assume that the cash flows shown in the table are paid all at once at the given point in time.

What is the Net Present Value (NPV) of the project?

Project Cash Flows | |

Time (yrs) | Cash flow ($) |

0 | -100 |

1 | 0 |

2 | 121 |

Portfolio Details | ||||||

Stock | Expected return |
Standard deviation |
Correlation | Dollars invested |
||

A | 0.1 | 0.4 | 0.5 | 60 | ||

B | 0.2 | 0.6 | 140 | |||

What is the expected return of the above portfolio?

A 30-day Bank Accepted Bill has a face value of $1,000,000. The interest rate is 2.5% pa and there are 365 days in the year. What is its price now?

**Question 568** rights issue, capital raising, capital structure

A company conducts a **1** for **5** rights issue at a subscription price of $**7** when the pre-announcement stock price was $**10**. What is the percentage change in the stock price and the number of shares outstanding? The answers are given in the same order. Ignore all taxes, transaction costs and signalling effects.

A trader **buys** one crude oil European style **call** option contract on the CME expiring in one year with an exercise price of $44 per barrel for a price of $6.64. The crude oil spot price is $40.33. If the trader doesn’t close out her contract before maturity, then at maturity she will have the:

**Question 693** boot strapping zero coupon yield, forward interest rate, term structure of interest rates

Information about three risk free Government bonds is given in the table below.

Federal Treasury Bond Data |
||||

Maturity |
Yield to maturity |
Coupon rate |
Face value |
Price |

(years) | (pa, compounding semi-annually) | (pa, paid semi-annually) | ($) | ($) |

0.5 | 3% | 4% | 100 | 100.4926 |

1 | 4% | 4% | 100 | 100.0000 |

1.5 | 5% | 4% | 100 | 98.5720 |

Based on the above government bonds' yields to maturity, which of the below statements about the spot zero rates and forward zero rates is **NOT** correct?

**Question 737** financial statement, balance sheet, income statement

Where can a publicly listed firm's book value of equity be found? It can be sourced from the company's:

Use the below information to value a levered company with constant annual perpetual cash flows from assets. The next cash flow will be generated in one year from now, so a perpetuity can be used to value this firm. Both the operating and firm free cash flows are constant (but not equal to each other).

Data on a Levered Firm with Perpetual Cash Flows | ||

Item abbreviation | Value | Item full name |

##\text{OFCF}## | $100m | Operating free cash flow |

##\text{FFCF or CFFA}## | $112m | Firm free cash flow or cash flow from assets |

##g## | 0% pa | Growth rate of OFCF and FFCF |

##\text{WACC}_\text{BeforeTax}## | 7% pa | Weighted average cost of capital before tax |

##\text{WACC}_\text{AfterTax}## | 6.25% pa | Weighted average cost of capital after tax |

##r_\text{D}## | 5% pa | Cost of debt |

##r_\text{EL}## | 9% pa | Cost of levered equity |

##D/V_L## | 50% pa | Debt to assets ratio, where the asset value includes tax shields |

##t_c## | 30% | Corporate tax rate |

What is the value of the levered firm including interest tax shields?

**Question 861** open interest, closing out future contract, no explanation

Alice, Bob, Chris and Delta are traders in the futures market. The following trades occur over a single day in a newly-opened equity index future that matures in one year which the exchange just made available.

1. Alice buys 2 future from Bob.

2. Chris buys 5 futures from Delta.

3. Chris buys 9 futures from Bob.

These were the only trades made in this equity index future.

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

Which one of the following statements is **NOT** correct? A 1-for-4 bonus issue: