Anton 1
Anton 2
Annika 1
Annika 3
100
Defined as the Rate of Return that equates the PV of an Investment’s Expected Benefits (Inflows) with the PV of its Costs (Outflows)
What is the Internal Rate of Return (IRR)?
100
T/F: One should accept projects with a Positive NPV. This is because NPV Projects will increase Shareholder Wealth.
What is True?
100
T/F: The Present Value of Cash Outflows is often equal to The Present Value of Cash Inflows
What is False? PV of CF Outflows is always equal to the PV of CF Inflow (p 39 formula)
100
A loan has a nominal interest rate of 12% compounded monthly. Find the EAR and EAY.
What is 12.68%
200
2 x this discount rate is used to get the Bond Equivalent Yield
What is the Semi-Annual Discount Rate?
200
This is the Formula for what yield?
What is Effective Annual Yield (EAY)?
200
It is used to compute for the measurement period of a time-weighted rate of return problem when the total investment period is more than a year.
What is Geometric Mean?
200
A Treasury bill with a face value of $10,000 is being sold at a discount of $200. The bill matures in 90 days. Calculate the bank discount yield.
What is 0.08%
300
This is the formula for what yield?
What is the Bank Discount Yield (rBD)?
300
Given a $1,000 T-Bill with 100 days to maturity and a price of $990. Calculate the Effective Annual Yield.
What is 3.74%?
300
It is percentage change in the value of an investment over the period it is held.
What is Holding Period Return?
300
In the NPV rule, what does it mean when you select the project with the greater NPV?
Clue: What does it mean for the people that invest in your project?
What is Shareholder Wealth Maximization?
400
Initial Cost is $6 Million, Positive Cash Flows of $3 Million end of year 1, $4 Million end of year 2, $5 Million end of year 3, Discount Rate of 10%. Calculate the NPV.
What is 3.7896 or $3.8 Million?
400
Suppose you are evaluating a bond with a semi-annual coupon payment of $50 and a face value (par value) of $1,000. The bond has a remaining maturity of 2 years. What is the BEY?
What is 5.102%?
400
When is the money-weighted return higher than the time-weighted return?
What is when funds are added to the portfolio at a favorable time?
400
You are considering an investment project that requires an initial outlay of $10,000. The project is expected to generate cash flows of $3,000 at the end of Year 1, $4,000 at the end of Year 2, and $6,000 at the end of Year 3. Calculate the internal rate of return (IRR) for this investment project.
What is 12.17%
500
Suppose you purchased 100 shares of a company's stock at a price of $50 per share, resulting in a total investment of $5,000. Over a holding period of one year, you received dividends totaling $200. After the holding period, you decide to sell all your shares at a price of $60 per share.What is the HPY?
What is 24%?
500
What formula is this for?
What is NPV?
500
T/F: Effective Annual Rate (EAR) is the same as Effective Annual Yield (EAY)?
What is True?
500
Suppose an investor's portfolio had the following values at the beginning and end of each quarter during a year. What is the time-weighted rate of return (TWRR) for the investor's portfolio over the year is approximately?
What is 31.1%?