Finance Answers

The difference in returns between Treasury bills and the FTSE Bursa Malaysia (FBM) KLCI is 5.50%. The Treasury bill rate is 3% . Krogh Enterprise has a beta of 1.60. What's the market return?

What is the required rate of return of Krogh Enterprise?

The difference in returns between Treasury bills and the FTSE Bursa Malaysia (FBM) KLCI is 5.50%. The Treasury bill rate is 3% . Krogh Enterprise has a beta of 1.60. What's the market return?

An analyst believes that economic conditions during the next year will either be strong, normal, or weak, and she thinks that the Corrigan Company's returns will have the following probability distribution.

Conditions Probability (%) Return (%)

Strong 30 30

Normal 40 15

Weak 30 -10

What is Corrigan’s expected return?

Your bank account pays a nominal interest rate of 8%, compounded quarterly. You deposit $500 in the account today, and deposit $1,000 in the account at the end of the first year. How much will you have in the account at the end of the first year?

1.1 Suppose you buy a round lot of MM Industries stock on 55 percent margin when the stock is selling at $20 a share. The broker charges a 10 percent annual interest rate, and commissions are 3 percent of the total stock value on both the purchase and sale. A year later, you receive a $0.50 per share dividend and sell the stock for 27. What is your rate of return on the investment?

Find the IRR of the following investments and determine which should be accepted, given a

required rate of return of 10%:

Investment A: An investment costing $31,140 promising a cash flow of $3,000 per year for 15

years.

Investment B: An investment costing $46,000 promising a cash flow of $6,000 per year for 20

years.

DESCRIBE the process followed at your bank to capture, assess and use client information for sales purposes

Omwando PLC had 400,000 9% redeemable preference shares of £1.00 per share in issue, originally issued at a premium of £0.40 per share.

The company now proposes to redeem 100,000 of these shares at £1.60 per share, financed partially by the issue of 80,000 ordinary shares of £1.00 per share at £1.20

Prior to the issue of replacement shares, the share premium account had a credit balance of £121,000.

Required:

Show the amount of premium payable on redemption to be apportioned from

a.      Share premium account and

b.     Distributable profits

c.      Show the amount, if any, to be transferred to Capital Redemption Reserve as the result of the redemption.

d.     Show journal entries necessary to record above transactions. (Total: 20marks)

Suppose the regulator asks one of the losses making Bank XYZ to close a few branches

to reduce cost thereby make the bank more sustainable/profitable. But XYZ Bank

refuses to close its few branches, citing some risk/s involved in the process. What are

the risks XYZ Bank perceives if it closes a few branches?

Which are the major risks banks are exposed to and how they mitigate it?