# Fight Finance

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For a price of $102, Andrea will sell you a share which just paid a dividend of$10 yesterday, and is expected to pay dividends every year forever, growing at a rate of 5% pa.

So the next dividend will be $10(1+0.05)^1=10.50$ in one year from now, and the year after it will be $10(1+0.05)^2=11.025$ and so on.

The required return of the stock is 15% pa.

Would you like to the share or politely ?

A project to build a toll road will take 3 years to complete, costing three payments of $50 million, paid at the start of each year (at times 0, 1, and 2). After completion, the toll road will yield a constant$10 million at the end of each year forever with no costs. So the first payment will be at t=4.

The required return of the project is 10% pa given as an effective nominal rate. All cash flows are nominal.

What is the payback period?

A project has the following cash flows:

 Project Cash Flows Time (yrs) Cash flow ($) 0 -400 1 0 2 500 The required return on the project is 10%, given as an effective annual rate. What is the Internal Rate of Return (IRR) of this project? The following choices are effective annual rates. Assume that the cash flows shown in the table are paid all at once at the given point in time. If the current AUD exchange rate is USD 0.9686 = AUD 1, what is the American terms quote of the AUD against the USD? How is the AUD normally quoted in Australia? Using or terms? The below graph shows a project's net present value (NPV) against its annual discount rate. For what discount rate or range of discount rates would you accept and commence the project? All answer choices are given as approximations from reading off the graph. What is the present value of a nominal payment of$1,000 in 4 years? The nominal discount rate is 8% pa and the inflation rate is 2% pa.

Below is a graph of the USD against the JPY and EUR from 1980 to 2015, compiled by the RBA. Select the correct statement about what occurred between 1980 and 2015. Note that in 1980 the euro was around 1.3 USD per EUR and the Yen was around 250 JPY per USD.

Which of the following quantities from the Black-Scholes-Merton option pricing formula gives the Delta of a European call option?

Where:

$$d_1=\dfrac{\ln⁡[S_0/K]+(r+\sigma^2/2).T)}{\sigma.\sqrt{T}}$$ $$d_2=d_1-\sigma.\sqrt{T}=\dfrac{\ln⁡[S_0/K]+(r-\sigma^2/2).T)}{\sigma.\sqrt{T}}$$

The below graph from the RBA shows the phase-in of the Basel 3 minimum regulatory capital requirements under the Basel Committee on Banking Supervision (BCBS) on the left panel and in Australia under the Australian Prudential Regulatory Authority (APRA) on the right panel.

Which of the following statements about the Basel 3 minimum regulatory capital requirements as at 2019 is NOT correct? All minimum amounts exclude the 2.5% counter-cyclical buffer.

The Basel 3 minimum regulatory capital requirement as a percent of Risk Weighted Assets (RWA) is: