A stock pays semi-annual dividends. It just paid a dividend of $10. The growth rate in the dividend is 1% every 6 months, given as an effective **6 month** rate. You estimate that the stock's required return is 21% pa, as an effective **annual** rate.

Using the dividend discount model, what will be the share price?

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?

When someone says that they're "buying American dollars" (USD), what type of asset are they probably buying? They're probably buying:

**Question 412** enterprise value, no explanation

A large proportion of a levered firm's assets is cash held at the bank. The firm is financed with half equity and half debt.

Which of the following statements about this firm's enterprise value (EV) and total asset value (V) is **NOT** correct?

A home loan company advertises an interest rate of 6% pa, payable monthly. Which of the following statements about the interest rate is **NOT** correct? All rates are given to four decimal places.

**Question 710** continuously compounding rate, continuously compounding rate conversion

A continuously compounded **monthly** return of 1% ##(r_\text{cc monthly})## is equivalent to a continuously compounded **annual** return ##(r_\text{cc annual})## of:

You bought a house, primarily funded using a home loan from a bank. Which of the following statements is **NOT** correct?

The market's expected total return is **10**% pa and the risk free rate is **5**% pa, both given as effective annual rates.

A stock has a beta of **0.5**.

In the last 5 minutes, the federal government unexpectedly raised taxes. Over this time the share market fell by **3**%. The risk free rate was unchanged.

What do you think was the stock's historical return over the last 5 minutes, given as an effective 5 minute rate?

You just spent $**1,000** on your credit card. The interest rate is **24**% pa compounding **monthly**. Assume that your credit card account has no fees and no minimum monthly repayment.

If you can't make any interest or principal payments on your credit card debt over the next year, how much will you owe **one year** from now?