**Question 64** inflation, real and nominal returns and cash flows, APR, effective rate

In Germany, nominal yields on **semi**-annual coupon paying Government Bonds with 2 years until maturity are currently **0.04**% pa.

The inflation rate is currently **1.4**% pa, given as an APR compounding per **quarter**. The inflation rate is not expected to change over the next 2 years.

What is the real yield on these bonds, given as an APR compounding every 6 months?

Your credit card shows a $600 debt liability. The interest rate is 24% pa, payable monthly. You can't pay any of the debt off, except in 6 months when it's your birthday and you'll receive $50 which you'll use to pay off the credit card. If that is your only repayment, how much will the credit card debt liability be one year from now?

Two risky stocks A and B comprise an equal-weighted portfolio. The correlation between the stocks' returns is 70%.

If the variance of stock A's returns **increases** but the:

- Prices and expected returns of each stock stays the same,
- Variance of stock B's returns stays the same,
- Correlation of returns between the stocks stays the same.

Which of the following statements is **NOT** correct?

**Question 442** economic depreciation, no explanation

A fairly valued share's current price is $**4** and it has a total required return of **30**%. Dividends are paid annually and next year's dividend is expected to be $1. After that, dividends are expected to grow by **5**% pa. All rates are effective annual returns.

What is the expected dividend cash flow, economic depreciation, and economic income and economic value added (EVA) that will be earned over the second year (from t=**1** to t=**2**) and paid at the end of that year (t=**2**)?

You have $**100,000** in the bank. The bank pays interest at **10**% pa, given as an effective annual rate.

You wish to consume **twice** as much now (t=0) as in one year (t=1) and have nothing left in the bank at the end.

How much can you consume at time zero and one? The answer choices are given in the same order.

What is the covariance of a variable X with a constant C?

The cov(X, C) or ##\sigma_{X,C}## equals:

An American wishes to convert **USD 1 million** to Australian dollars (AUD). The exchange rate is **0.8 USD per AUD**. How much is the USD 1 million worth in AUD?

An Apple (NASDAQ:AAPL) stock was purchased by an investor for $120 and one year later was sold for $150. A dividend of $4 was also collected at the end of the year just before the stock was sold.

Which of the following statements about the stock investment is **NOT** correct? Ignore taxes.

Over the year, the investor made a:

.