Fight Finance

Would you like to his share or politely ?

If the AUD appreciates against the USD, the European terms quote of the AUD will or ?

(a) Selling the company's assets.

(b) Buying a call option on the company's assets.

(c) Buying a put option on the company's assets.

(d) Selling a call option on the company's assets.

(e) Selling a put option on the company's assets.

(a) Investment decision.

(b) Financing decision.

(c) Working capital decision.

(d) Payout policy decision.

(e) Capital or labour decision.

(a) The market value of equity of a listed company's common stock is equal to the number of common shares multiplied by the share price.

(b) The book value of equity is the sum of contributed equity, retained profits and reserves.

(c) A company's book value of equity is recorded in its income statement, also known as the 'profit and loss' or the 'statement of financial performance'.

(d) A new company's market value of equity equals its book value of equity the moment that its shares are first sold. From then on, the market value changes continuously but the book value is recorded at historical cost which typically only changes due to retained profits.

(e) To buy all of the firm's shares, generally a price close to the market value of equity will have to be paid.

(a) The NPV is negative $1m.

(b) The IRR is 9.09% pa, less than the 10% cost of capital.

(c) The payback period is infinite, the project will never pay itself off.

(d) The project should be rejected.

(e) If the project is accepted then the market value of the firm's assets will fall by $1m.

(a) total required yield

(b) cost of capital

(c) discount rate

(d) opportunity cost of capital

(e) accounting rate of return

(a) $0

(b) $10

(c) $50

(d) Positive infinity

(e) Priceless

(a) DRP's are voluntary, shareholders only participate if they choose.

(b) DRP's increase the number of shares.

(c) The number of shares issued to a shareholder participating in a DRP is usually calculated as their total dividends owed, divided by the allocation share price which is usually close to the current market share price.

(d) DRP's do not incur brokerage costs for the shareholder. This is unlike the case where the shareholder uses the cash dividend to buy more shares herself.

(e) If all shareholders participated in a company's DRP, the company would not pay any dividends and the firm's share price would not fall due to the cash dividend or the DRP.

(a) Consumer staple stocks with high payout ratios such as shares in supermarkets.

(b) Fast-growing technology stocks with low payout ratios such as shares in software companies.

(c) Fixed coupon 3 year government bonds that were just issued and pay semi-annual coupons.

(d) Floating coupon 3 year corporate bonds that were just issued and pay semi-annual coupons.

(e) 90 day certificate of deposit.