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 | 11 |
2 | 121 |
The following equation is the Dividend Discount Model, also known as the 'Gordon Growth Model' or the 'Perpetuity with growth' equation.
### p_0= \frac{c_1}{r-g} ###
Which expression is equal to the expected dividend return?
Question 490 expected and historical returns, accounting ratio
Which of the following is NOT a synonym of 'required return'?
The efficient markets hypothesis (EMH) and no-arbitrage pricing theory are most closely related to which of the following concepts?
A stock's total standard deviation of returns is 20% pa. The market portfolio's total standard deviation of returns is 15% pa. The beta of the stock is 0.8.
What is the stock's diversifiable standard deviation?
A company conducts a 2 for 3 rights issue at a subscription price of $8 when the pre-announcement stock price was $9. Assume that all investors use their rights to buy those extra shares.
What is the percentage increase in the stock price and the number of shares outstanding? The answers are given in the same order.
The phone company Optus have 2 mobile service plans on offer which both have the same amount of phone call, text message and internet data credit. Both plans have a contract length of 24 months and the monthly cost is payable in advance. The only difference between the two plans is that one is a:
- 'Bring Your Own' (BYO) mobile service plan, costing $80 per month. There is no phone included in this plan. The other plan is a:
- 'Bundled' mobile service plan that comes with the latest smart phone, costing $100 per month. This plan includes the latest smart phone.
Neither plan has any additional payments at the start or end. Assume that the discount rate is 1% per month given as an effective monthly rate.
The only difference between the plans is the phone, so what is the implied cost of the phone as a present value? Given that the latest smart phone actually costs $600 to purchase outright from another retailer, should you commit to the BYO plan or the bundled plan?
Which of the following statements is NOT correct? Money market securities are:
Question 948 VaR, expected shortfall
Below is a historical sample of returns on the S&P500 capital index.
S&P500 Capital Index Daily Returns Ranked from Best to Worst |
||
10,000 trading days from 4th August 1977 to 24 March 2017 based on closing prices. |
||
Rank | Date (DD-MM-YY) |
Continuously compounded daily return (% per day) |
1 | 21-10-87 | 9.23 |
2 | 08-03-83 | 8.97 |
3 | 13-11-08 | 8.3 |
4 | 30-09-08 | 8.09 |
5 | 28-10-08 | 8.01 |
6 | 29-10-87 | 7.28 |
… | … | … |
9980 | 11-12-08 | -5.51 |
9981 | 22-10-08 | -5.51 |
9982 | 08-08-11 | -5.54 |
9983 | 22-09-08 | -5.64 |
9984 | 11-09-86 | -5.69 |
9985 | 30-11-87 | -5.88 |
9986 | 14-04-00 | -5.99 |
9987 | 07-10-98 | -6.06 |
9988 | 08-01-88 | -6.51 |
9989 | 27-10-97 | -6.55 |
9990 | 13-10-89 | -6.62 |
9991 | 15-10-08 | -6.71 |
9992 | 29-09-08 | -6.85 |
9993 | 07-10-08 | -6.91 |
9994 | 14-11-08 | -7.64 |
9995 | 01-12-08 | -7.79 |
9996 | 29-10-08 | -8.05 |
9997 | 26-10-87 | -8.4 |
9998 | 31-08-98 | -8.45 |
9999 | 09-10-08 | -12.9 |
10000 | 19-10-87 | -23.36 |
Mean of all 10,000: | 0.0354 | |
Sample standard deviation of all 10,000: | 1.2062 | |
Sources: Bloomberg and S&P. | ||
Assume that the one-tail Z-statistic corresponding to a probability of 99.9% is exactly 3.09. Which of the following statements is NOT correct? Based on the historical data, the 99.9% daily: