Government bonds currently have a return of 5%. A stock has a beta of 2 and the market return is 7%. What is the expected return of the stock?
Find World Bar's Cash Flow From Assets (CFFA), also known as Free Cash Flow to the Firm (FCFF), over the year ending 30th June 2013.
| World Bar | ||
| Income Statement for | ||
| year ending 30th June 2013 | ||
| $m | ||
| Sales | 300 | |
| COGS | 150 | |
| Operating expense | 50 | |
| Depreciation | 40 | |
| Interest expense | 10 | |
| Taxable income | 50 | |
| Tax at 30% | 15 | |
| Net income | 35 | |
| World Bar | ||
| Balance Sheet | ||
| as at 30th June | 2013 | 2012 |
| $m | $m | |
| Assets | ||
| Current assets | 200 | 230 |
| PPE | ||
| Cost | 400 | 400 |
| Accumul. depr. | 75 | 35 |
| Carrying amount | 325 | 365 |
| Total assets | 525 | 595 |
| Liabilities | ||
| Current liabilities | 150 | 205 |
| Non-current liabilities | 235 | 250 |
| Owners' equity | ||
| Retained earnings | 100 | 100 |
| Contributed equity | 40 | 40 |
| Total L and OE | 525 | 595 |
Note: all figures above and below are given in millions of dollars ($m).
A 30 year Japanese government bond was just issued at par with a yield of 1.7% pa. The fixed coupon payments are semi-annual. The bond has a face value of $100.
Six months later, just after the first coupon is paid, the yield of the bond increases to 2% pa. What is the bond's new price?
Which of the following companies is most suitable for valuation using PE multiples techniques?
Question 539 debt terminology, fully amortising loan, bond pricing
A 'fully amortising' loan can also be called a:
An Indonesian lady wishes to convert 1 million Indonesian rupiah (IDR) to Australian dollars (AUD). Exchange rates are 13,125 IDR per USD and 0.79 USD per AUD. How many AUD is the IDR 1 million worth?
Question 778 CML, systematic and idiosyncratic risk, portfolio risk, CAPM
The capital market line (CML) is shown in the graph below. The total standard deviation is denoted by σ and the expected return is μ. Assume that markets are efficient so all assets are fairly priced.
Which of the below statements is NOT correct?
The below diagram shows a firm’s cash cycle.
Which of the following statements about companies’ cash cycle is NOT correct?
Question 884 monetary policy, impossible trinity, foreign exchange rate, no explanation
According to the impossible trinity, a currency can only have two of these three desirable traits: be fixed against the USD; convertible to and from USD for traders and investors so there are open goods, services and capital markets; and allow independent monetary policy set by the country’s central bank, independent of the US central bank.
Which of the following exchange rate regimes sacrifices fixing the exchange rate to the USD? In other words, which regime uses a floating exchange rate?