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Question 128  debt terminology, needs refinement

An 'interest payment' is the same thing as a 'coupon payment'. or ?

Question 373  debt terminology

Which of the following statements is NOT correct? Lenders:

Question 378  leverage, capital structure, no explanation

A levered company's required return on debt is always less than its required return on equity. or ?

Question 520  NPV, DDM

The following cash flows are expected:

  • Constant perpetual yearly payments of $70, with the first payment in 2.5 years from now (first payment at t=2.5).
  • A single payment of $600 in 3 years and 9 months (t=3.75) from now.

What is the NPV of the cash flows if the discount rate is 10% given as an effective annual rate?

Question 563  correlation

What is the correlation of a variable X with itself?

The corr(X, X) or ##\rho_{X,X}## equals:

Question 596  future, continuously compounding rate

An equity index is currently at 5,000 points. The 2 year futures price is 5,400 points and the total required return is 8% pa with continuous compounding. Each index point is worth $25.

What is the implied continuous dividend yield as a continuously compounded rate per annum?

Question 606  foreign exchange rate, American and European terms

Which of the following FX quotes (current in October 2015) is given in American terms?

Question 762  equivalent annual cash flow, no explanation offers the Apple iphone 5S smart phone for rent at $12.95 per week paid in advance on a 2 year contract. After renting the phone, you must return it to Radio-Rentals. offers the Apple iphone 5S smart phone for sale at $699. You estimate that the phone will last for 3 years before it will break and be worthless.

Currently, the effective annual interest rate is 11.351%, the effective monthly interest rate 0.9% and the effective weekly interest rate is 0.207%. Assume that there are exactly 52 weeks per year and 12 months per year.

Find the equivalent annual cost of renting the phone and also buying the phone. The answers below are listed in the same order.

Question 819  option, derivative terminology, no explanation

Which of the following terms about options are NOT synonyms?

Question 868  cash cycle

What is the Cash Conversion Cycle for a firm with a:

  • Payables period of 1 day;
  • Inventory period of 50 days; and
  • Receivables period of 30 days?

All answer options are in days: