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fins1613 finals Essay

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FAMILY NAME: ______________________________________
OTHER NAME(S): ______________________________________
STUDENT ID: ______________________________________
SIGNATURE: ______________________________________

PAPER ID: 00615
THE UNIVERSITY OF NEW SOUTH WALES
AUSTRALIAN SCHOOL OF BUSINESS
SCHOOL OF BANKING AND FINANCE
FINS1613: BUSINESS FINANCE
SEMESTER 1 2012
FINAL EXAM
1. TIME ALLOWED – 3 hours
2. THIS EXAMINATION PAPER HAS 19 PAGES
3. TOTAL NUMBER OF QUESTIONS – 45 Multiple Choice
4. TOTAL MARKS AVAILABLE – 45
5. MULTIPLE CHOICE QUESTIONS ARE 1 (ONE) MARK PER QUESTION.
6. THE EXAMINATION PAPER HAS 1 PART.
a. You must complete a Generalised Answer Sheet for this exam
b. Complete the top portion of the generalized answer …show more content…

b.

At any point in time, the price of two equivalent goods trading in different competitive markets will be the same.

c.

If equivalent goods or securities trade simultaneously in different competitive markets, then they will trade for the same price in both markets.

d.

An important property of the Law of One Price is that it holds even in markets where arbitrage is not possible.

e.

All of the above are correct

3 of 19

7. The table provides information on the current price and future cash flows from three risk free bonds. According to the Law of One Price, what must be the price of Bond C in competitive markets?

Bond

Price

Payments
Year 1 Year 2

A

115

?

0

100

$164.00
$84.03

e.

15

$9.84

d.

$104.64

$64.05

c.

109

C

b.

9

B

a.

$94.80

$80.03

8. What is the net present value of the following cash flows discounted at 12%?
Payments
Year
Cash flow

a.

14.16

27.79

$13.32

e.

-$28.63

$6.17

d.

2

$7.74

c.

1

$8.83

b.

0

$34.80

9. What is the present value of an 8-year annuity that makes quarterly payments of $73 if the discount rate is 3.5% annual percentage rate (APR)?
a.
b.

$501.80

c.

$1,392.03

d.

$2,007.20

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