Finance Answers

a) Aspian Tres Bhd issued a bond on March 18, 2019. The terms were as follows:

Currency Denomination Malaysian Ringgit

Denomination/Par Value MYR100,000

Maturity Date March 18, 2029, or an optional redemption date

Redemption/payment basis Redemption at Par Value

Interest Payment Dates March 18

September 18

Optional Redemption Date The issuer has the right to call the instruments in

whole (but not in part) at 10 percent call premium

starting March 18,2024 with a reducing premium of

200 basis point annually thereafter.

Interest Rate Fixed rate of 6% for the whole term of bond

A fund manager with XYZee Fund in Singapore is considering this bond on November

1st, 2020:

.

i) Compute the amount paid for a unit of this bond in the investor’s local currency if the

expected return on this bond is expected at 6.6 percent and the exchange rate is

SGD1/MYR3.06. (Disregard fees and other expenses)

You uncle heard that real estate investment could yield remarkable return for investor, and he told you that he is offered a mortgage loan of RM 450, 000 with a rate of 4.5% by Bank A to purchase a double-storey terrace house in Semenyih, the loan is scheduled to be repaid in 35 years with a fixed monthly payment. Use the knowledge that you learned in Finance class,

a.               Calculate the monthly fixed payment to the bank.

b.              Use an amortization table to explain to your uncle the total interest rate that he is going to pay to the bank if he decides to accept the loan.

You planned to buy a stock of company A, given the following information of the stock:

i. Beta of the stock: 1.5

ii. 3 months treasury bill yield: 3%

iii. Market return: 12%

a.               Calculate your required rate of return for the stock?          

b.              Assuming the stock price paid RM 2 dividend last period, and expected to grow at 8 % for 4 years, and a constant rate of 4% after that, what is the expected stock price that you will buy the stock in order to earn your required return?          

Given the end-of-month prices for stock X for January 2020 through June 2020,

Month End-of-Month Price

January 2020 15.25

February 2020 16.10

March 2020 16.20

April 2020 15.80

May 2020 15.85

June 2020 16.30

calculate

a.        Monthly holding-period return

b.              Average Return

c.               Standard Deviation

Given the following information for Company A, find the WACC. Assume the company’s tax rate is 21%

i.                Debt: 15,000 bonds selling for RM 1080, with a Yield To Maturity 5%

ii.              Common Stock: 500,000 shares outstanding, selling for RM 50 per share, the beta is 1.09

iii.            Preferred stock: 30,000 shares, paying fixed RM 5 dividend per share, selling at RM 60 per stock

The market risk - free rate is at 3.2% with 7% market risk premium.

Before the Inclusion of Corporate Tax explain why M & M Proposition II suggested that capital structure of a firm does not affect the cost of capital of the firm?

Explain the following (with Example)

a. Interest Rate Parity

b. Purchasing Power Parity

As the Chief Financial Controller, what are the key factors or constraints that you should consider when making decisions on dividend pay out policy?

The Notre Dame Model UN club has 20 members. Five are seniors, four are juniors, two are sophomores and nine are freshmen.

a. In how many ways can the club select a president, a secretary and a treasurer if every member is eligible for each position and no member can hold two positions? Blank 1 ways

b. Regardless of the position, what is the probability that 2 juniors and 1 senior will be selected? Blank 2

The Efficient Market Hypothesis (EMH) is a theory that explores the relationship between the availability of information and asset prices. It argues that all available information is already reflected in the price of share and therefore, it is impossible to beat the market over the long-term. Briefly explain the sub-hypotheses in EMH.