Question 21 (1 point)

All else equal, the present value of an ordinary share will be impacted positively by

Question 21 options:

	An increase in the required rate of return
	An increase in the expected dividend growth rate
	none of the listed options
	A decrease in the required rate of return

Question 22 (1 point)

Australia's central bank has decided to decrease interest rates as a result of softening economic conditions. This change in interest rates can be seen as what type of risk?

Question 22 options:

	Firm-specific risk
	unsystematic risk
	market risk
	diversifiable risk

Question 23 (1 point)

The issuer of a bond is unable to meet the financial commitments of the bond contract. This can be seen as an example of:

Question 23 options:

	The risk that the yield to maturity will decrease
	Interest rate risk
	Default risk
	Both interest rate and default risk.

Question 24 (1 point)

Interest rate risk can be best explained as follows:

Question 24 options:

	The risk that coupon payments will change when interest rates change.
	Interest rate changes will cause the price of the bond to change.
	The issuer of the bond is unable to meet the coupon payments of the bond.
	None of options provided.

Question 25 (2 points)

Drake Ltd has issued bonds that are currently priced at $1056.70. They have a $1,000 par value and 9 years to maturity. They pay a semi-annual coupon of 7%. What is the annualised yield to maturity on this bond.

Question 25 options:

Question 26 (2 points)

You plan to purchase property in Melbourne 12 years from today at an estimated purchase price of $1,250,000. The funds for the property will be accumulated by making 12 equal annual deposits in your savings account, which earn 15% interest, compounded annually. If you make your first deposit at the end of this year and you would like your account to reach $1,250,000 when the final deposit is made, what will be the amount of each annual deposit?

Question 26 options:

Question 27 (3 points)

You a reviewing an investment and you expect that in 5-years time you will receive a return of $45,000 and you expect to receive this $45,000 per year for another 7 years beyond the first return (a total of 8 years of $45,000 in cash flows). Calculate the present value of these future cash flows. Assume a discount rate of 12%.

Question 27 options:

Question 28 (2 points)

Tiffany Ltd bonds have a coupon rate of 6%, paid semi-annually, face value of $1,000, and mature at the end of 6 years. What is the current price on this bond if its yield to maturity is 8%.

Question 28 options:

Question 29 (1 point)

You are reviewing an investment in a zero-coupon bond. The bond matures at the end of 5 years with a face value of $1,000. What value would you place on the bond if the yield to maturity is 9%?