For a price of $6, Carlos will sell you a share which will pay a dividend of $1 in one year and every year after that forever. The required return of the stock is 10% pa.
Find Trademark Corporation's Cash Flow From Assets (CFFA), also known as Free Cash Flow to the Firm (FCFF), over the year ending 30th June 2013.
|Income Statement for|
|year ending 30th June 2013|
|Income before tax||30|
|Tax at 30%||9|
|as at 30th June||2013||2012|
|Total L and OE||210||180|
Note: all figures are given in millions of dollars ($m).
Which one of the following bonds is trading at par?
A stock has a beta of 0.5. Its next dividend is expected to be $3, paid one year from now. Dividends are expected to be paid annually and grow by 2% pa forever. Treasury bonds yield 5% pa and the market portfolio's expected return is 10% pa. All returns are effective annual rates.
What is the price of the stock now?
You just started work at your new job which pays $48,000 per year.
The human resources department have given you the option of being paid at the end of every week or every month.
Assume that there are 4 weeks per month, 12 months per year and 48 weeks per year.
Bank interest rates are 12% pa given as an APR compounding per month.
What is the dollar gain over one year, as a net present value, of being paid every week rather than every month?
A firm is considering a business project which costs $11m now and is expected to pay a constant $1m at the end of every year forever.
Assume that the initial $11m cost is funded using the firm's existing cash so no new equity or debt will be raised. The cost of capital is 10% pa.
Which of the following statements about net present value (NPV), internal rate of return (IRR) and payback period is NOT correct?
The expression 'my word is my bond' is often used in everyday language to make a serious promise.
Why do you think this expression uses the metaphor of a bond rather than a share?
A Chinese man wishes to convert AUD 1 million into Chinese Renminbi (RMB, also called the Yuan (CNY)). The exchange rate is 6.35 RMB per USD, and 0.72 USD per AUD. How much is the AUD 1 million worth in RMB?
Mr Blue, Miss Red and Mrs Green are people with different utility functions. Which of the statements about the 3 utility functions is NOT correct?