# Fight Finance

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A two year Government bond has a face value of $100, a yield of 2.5% pa and a fixed coupon rate of 0.5% pa, paid semi-annually. What is its price? You just signed up for a 30 year fully amortising mortgage loan with monthly payments of$1,500 per month. The interest rate is 9% pa which is not expected to change.

To your surprise, you can actually afford to pay \$2,000 per month and your mortgage allows early repayments without fees. If you maintain these higher monthly payments, how long will it take to pay off your mortgage?

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

High risk firms in danger of bankruptcy tend to have:

Australians usually quote the Australian dollar in USD per 1 AUD. For example, in October 2015 the Australian dollar was quoted as 0.72 USD per AUD. Is this an or terms quote?

A firm conducts a two-for-one stock split. Which of the following consequences would NOT be expected?

Safe firms with low chances of bankruptcy will tend to have:

The Du Pont formula is:

$$\dfrac{\text{Net Profit}}{\text{Sales}} \times \dfrac{\text{Sales}}{\text{Total Assets}} \times \dfrac{\text{Total Assets}}{\text{Owners' Equity}}$$

Which of the following statements about the Du Pont formula is NOT correct?

Question 904  option, Black-Scholes-Merton option pricing, option on future on stock index

A six month European-style call option on six month S&P500 index futures has a strike price of 2800 points.

The six month futures price on the S&P500 index is currently at 2740.805274 points. The futures underlie the call option.

The S&P500 stock index currently trades at 2700 points. The stock index underlies the futures. The stock index's standard deviation of continuously compounded returns is 25% pa.

The risk-free interest rate is 5% pa continuously compounded.

Use the Black-Scholes-Merton formula to calculate the option price. The call option price now is:

Arthur and Bindi are the only people on a remote island. Their production possibility curves are shown in the graph.

Assuming that Arthur and Bindi cooperate according to the principles of comparative advantage, what will be their combined production possibilities curve?