Module 5

Dividend
1. A company declares a dividend of 27 cents per share, with an ex-dividend
date of 14 September. Immediately prior to the declaration of the dividend, the share
price was $4.79. At the close of trading on the stock exchange on 13 September, the
share price was $5.86. The theoretical ex-dividend price of the share is
$__________ (two decimal places) (5.59)

Theoretical Ex-dividend Price of the share = Share price at the close of trading on
last cumdividend day - Dividend

Ex-dividend price of the share: 5.86-0.27 = 5.59

2. The price of a share if it paid $1.57 in dividends in the last financial year, its
dividend growth rate is 3.8 per cent, and the required rate of return is 8.7 per cent
should be $___________ (two decimal places) (33.26)
3. The price of a share with a constant dividend of $3.36, if the growth rate is zero
and the required rate of return is 7.6 per cent per annum is $______________ (two
decimal places) (44.21)
4. A firm has recently paid a dividend per share of $1.78. The dividend is expected
to grow at the rate of 4 per cent per annum. If the minimum rate of return required by an
investor for that share is 10 percent, the real value of the stock is $_____________ (two
decimal places) (30.85)
5. A firm has recently paid a dividend per share of $1.16. The dividend is
expected to grow at the rate of 4 per cent per annum. If the minimum rate of return
required by an investor for that share is 10 per cent, the real value of the stock is
$_____________ (two decimal places) (20.11)
● P = [D0*(r-g)]/(r-g) = 20.11
6. The price of a share with a constant dividend of $3.07, if the growth rate is
zero and the required rate of return is 7.9 per cent per annum is $______________
(two decimal places) (38.86)
● P = D / r = 38.86%
7. A company declares a dividend of 17 cents per share, with an ex dividend date
of 14 September. Immediately prior to the declaration of the dividend, the share price
was $4.79. At the close of trading on the stock exchange on 13 September, the share
price was $5.54. The theoretical ex-dividend price of the share is $__________ (two
decimal places) (5.37)
8. The price of a share if it paid $1.39 in dividends in the last financial year, its
dividend growth rate is 3.1 per cent, and the required rate of return is 10.8 per cent
should be $___________ (two decimal places) (18.61)
9. The price of a share with a constant dividend of $2.90, if the growth rate is zero
and the required rate of return is 7.3 per cent per annum is $______________ (two
decimal places) ( 39.73)
10. A firm has recently paid dividend per share of $1.38. The dividend is expected to
grow at the rate of 6 per cent per annum. If the minimum rate of return required by an
investor for that share is 10 per cent, the real value of the stock is $_____________
(two decimal places) ( 36.57)

Split share
1. A company whose shares are currently trading at $3.3 proposes to have a 25
percent split; that is, four new shares for one existing share. At the commencement of
the next business day, a dividend of 20 cents is paid on existing shares, followed
immediately by the share split. The theoretical price of the new shares is $________
(two decimal places) (0.83)
● P = (current price*n)/m = (3.3 * 1)/4 = 0.83 \

2. Company shares are priced at $13.26. The company announces a share split of
4 for 1. The new share price should be $______________ (two decimal places) (3.32)
● P = (current price*n)/m = 3.32

3. A company whose shares are currently trading at $3.7 proposes to have a 25

percent split; that is, four new shares for one existing share. At the commencement of
the next business day, a dividend of 12 cents is paid on existing shares, followed
immediately by the share split. The theoretical price of the new shares is $________
(two decimal places) (0.93)
● Theoretical price of new shares: (current price*n)/m = (3.7*1)/4 = $0.93
4. Company shares are priced at $13.64. The company announces a share split of
4 for 1. The new share price should be $______________ (two decimal places) (3.41)
5. Company shares are priced at $13.13. The company announces a share split of
4 for 2. The new share price should be $______________ (two decimal places) (6.57)
Bonus share
An investor holds 400 shares of a company that is about to make a bonus issue of five
shares for every two held. If the shares are currently trading for $2.85, the value of the
holding after the bonus issue will be $_____________ (two decimal places) (1 140)

● The value of holding after the bonus issue = holding share*current price =
400*2.85 = 1140

If a company offers a 3-for-6 bonus issue and the current share price cum-bonus is
$7.29, the theoretical value of each share ex-bonus is $__________________ (two
decimal places) (4.86)

If a company offers a 3-for-6 bonus issue and the current share price cum-bonus is
$7.26, the theoretical value of each share ex-bonus is $__________________ (two
decimal places) (4.84)

● Cum: 6
● Ex: 9
● Value of 6 cum price: 7.26*6 = 43.56
● Value of 9 share ex-bonus = value of 6 cum price = 43.56

⇒ value of each share ex-bonus = 43.56/9 = 4.84

If a company offers a 2-for-7 bonus issue and the current share price cum-bonus is
$7.91, the theoretical value of each share ex-bonus is $__________________ (two
decimal places) (6.15)

● Value of 7 cum bonus: 7.91*7 = 55.37

● Value of 9 ex bonus = value of 7 cum bonus = 55.37

⇒ price of each share ex-bonus = 55.37/9 = 6.15

An investor holds 100 shares of a company that is about to make a bonus issue of five
shares for every two held. If the shares are currently trading for $2.96, the value of the
holding after the bonus issue will be $_____________ (two decimal places) (296.00)

An investor holds 100 shares of a company that is about to make a bonus issue of five
shares for every two held. If the shares are currently trading for $2.36, the value of the
holding after the bonus issue will be $_____________ (two decimal places) (236 .00)

if a company offers a 1-for-7 bonus issue and the current share price cum-bonus is
$6.57, the theoretical value of each share ex-bonus is $__________________ (two
decimal places) (5.75)
Rights issue
A company recently announced renounceable offers that give eligible shareholders the
right to purchase the shares of the company at an issue price of $9 per share for
every 4 shares they hold. If the cum-right shares are priced at $11, the value of the
right (subscription price) is $____________ (two decimal places) (1.6)

● Cum: 4
● Add: 1
● Ex : 5
● Price right issue: $9 (per each right share)
● Price per cum share: $11

⇒ value of cum right: $44

⇒ value right share: 1*9 = $9

⇒ total value : 44+9 = $53

=> value of theoretical ex right share: 53/5= 10.6

⇒ value of right: 4*(cum right price - subscription price) /(n+1) = ex price -

subscription price = 10.6-9 = 1.6

Value of right = n*(cum price - subscription price) / (n+1) = 4*(11-9)/5 = 1.6

The current market price of a stock is $3.23. The rights issue is one-for-ten, priced
at $2.84. The theoretical ex-rights price is $ ______________ (two decimal places)
(3.19)

● Current price before issue: 3.23

● Number of price before issue: 10

=> value of before issue rights: 3.23*10= 32.3

● Price right shares: 2.84

● Number of right shares: 1

=> value right shares: 2.84

=> total value of right: 32.3+2.84=35.14

● Ex = 10 + 1 = 11 => ex right price = 35.14 / 11 = 3.19

A company recently announced renounceable offers that give eligible shareholders the
right to purchase the shares of the company at an issue price of $8 per share for
every 5 shares they hold. If the cum-right shares are priced at $11, the value of
right is $____________ (two decimal places) (2.5)

● Price right issue : $8

● Number of right issue: 1
● Number of right before issue: 5
● Total ex right shares: 6
● Price of right before issue: $11

⇒ value of right before issue : 11*5 = 55

⇒ theortical ex right shares price: (55+8)/6 = 10.5 ⇒ 1 share

⇒ value of right : ex right price - subscription price = 10.5-8 = 2.5

⇒ cách này quá dàiiiii nha má, áp dụng cthức subscription

Value of right = n*(cum price - subscription price) / (n+1) = 5*(11-8)/6 = 2.5

The current market price of a stock is $3.14. The rights issue is one-for-ten, priced at
$2.77. The theoretical ex-rights price is $ ______________ (two decimal places) (3.11)

Financial
The following is a simplified financial position statement for a company:

Assets $ Liabilities $

Cash 220 000 Accounts payable 1500 000

Trading securities 340 000 Accrued expenses payable 290 000

Account receivable 1490 000 Taxes payable 170 000

Inventory 2790 000 Long-term debt 3 850 000

Property 3 350 000 Shareholders’ funds 2 340 000

Equipment 450 000

Calculate the liquid ratio (two decimal places). (1.05)

Formula:
C/A = Cash + trading securities + account receivable = 220+340+1490 = 2 050

C/L = A/P + AEP + taxes payable = 1500+290+170 = 1960

Liquid ratio = 2050/1960 = 1.05

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 (𝐶/𝐴)

𝐿𝑖𝑞𝑢𝑖𝑑 𝑟𝑎𝑡𝑖𝑜 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 (𝐶/𝐿)

If a share currently sells for $33 and has annual earnings per share of 2.74, the
price/earnings ratio is: (round your answer to one decimal place)

Formula:

P/E = 33/2.74 = 12.0

𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒

𝑃/𝐸 = 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒

If a share currently sells for $18 and has annual earnings per share of 2.44, the
price/earnings ratio is: (round your answer to one decimal place) (7.4)

● P/E = 18/2.44 = 7.4

If a share currently sells for $15 and has annual earnings per share of 2.68, the
price/earnings ratio is: (round your answer to one decimal place)

Franked dividend
BH Mining declared a 80 per cent partly franked dividend of $0.70 per share. The
company pays acorporate tax rate of 30 per cent. If a shareholder holds 100 shares
of BH Mining and theshareholder’s marginal tax rate is 37 per cent, the tax payable
by the shareholder is $__________ (10.78)

BH Mining declared a 90 per cent partly franked dividend of $0.70 per share. The
company pays a corporate tax rate of 30 per cent. If a shareholder holds 100 shares of
BH Mining and the shareholder’s marginal tax rate is 37 per cent, the tax payable by the
shareholder is $__________ (8.89)

BH Mining declared a 70 per cent partly franked dividend of $0.70 per share. The
company pays a corporate tax rate of 30 per cent. If a shareholder holds 100 shares of
BH Mining and the shareholder’s marginal tax rate is 37 per cent, the tax payable by the
shareholder is $__________

BH Mining declared a 90 per cent partly franked dividend of $0.80 per share. The
company pays a corporate tax rate of 30 per cent. If a shareholder holds 100 shares of
BH Mining and the shareholder’s marginal tax rate is 37 per cent, the tax payable by the
shareholder is $__________(10.16)

Module 6

Simple interest
If your deposit of $30,000 becomes $30,818 at the end of 120 days, the annual yield
earned is _________% (two decimal places) (8.29)

If a company sells (discounts) a bank bill with a face value of $100 000, a term to
maturity of 90 days, and a yield of 4.87% per annum, the company will raise
$__________________ on the issue? (Ignore transaction fees, two decimal places)
(98,813.43)

If a company sells (discounts) a bank bill with a face value of $500 000, a term to
maturity of 120 days, and a yield of 8.70% per annum, the company will raise
$_______________ on the issue? (Ignore transaction fees, two decimal places)
(486,096.31)

An investor deposits $6000. How long will it take them to double the initial deposit if the
investment earns a simple interest rate of 5.5% per annum? ___________years (two
decimal places) (18.18)

A bank bill with a face value of $500,000 and 90 days to maturity is purchased with a
yield to maturity of 7.44% per annum. After the bill has been held for 28 days, it is sold
at a yield of 6.78% per annum. The holding period yield for the holder of the note is
________% (two decimal places) (8.80)
A bank bill with a face value of $500,000 and 90 days to maturity is purchased with a
yield to maturity of 7.48% per annum. After the bill has been held for 28 days, it is sold
at a yield of 6.78% per annum. The holding period yield for the holder of the note is
________% (two decimal placecs) (8.93)

● Purchase: 90days - $500,000 - YTM: 7.48%

● Sale : 28 days ( remaining 62days) - 6.78%
● Return to original investor (return to original investor = I(interest): sale price -
purchase price = ..

Calculate buy price and sell price

𝐹𝑉
Buy price = 1+ (𝑑/365 × 𝑅𝑏)

𝐹𝑉
Sell price = 1+[(𝑑−ℎ𝑒𝑙𝑑 𝑑𝑎𝑦𝑠)/365 × 𝑅𝑠]

● HPY = (365/ held days) * [(Sell-buy)/ buy]

If you invest $5800 for a year at 4.4% per annum simple interest, what is the value of
your investment at the end of the year? $_______________ (two decimal places)
(6,055.20)

*chú ý keywords đề hỏi "value of investment" hay "raise...on the issue

● I = A*d/365 * i
● ⇒ A = $255.2
● ⇒ Value of the investment: $5800 + $255.2 = $6055.2
● => value of the investment: 5800*(1+1*4.4%) = $6055.2

If you invest $1330 for a year at 6% per annum simple interest, you will earn $
___________ of interest (two decimal places) (79.80) *chú ý keywords đề hỏi "interest
will earn"

If you borrow $100,000 for 90 days with simple interest of 7.5% per annum, the total
amount of interest paid on the loan is $ _____________ (two decimal places) (1,849.32)

If you invest $_______ to earn simple interest of 6.87% per year, you will receive
$12,625 at the end of two years (11,099.88)
If you invest $14300 for 18 months at 6.7% per annum simple interest, the value of your
investment at the end of the 18 months will be $________________ (two decimal
places) (15,737.15)

● I = A*d/365 * i = 14300*1.5*6.7% = 1437.15

● ⇒ Value of the investment: $1437.15 + $14300 = $15,737.15

Compound interest
If your investment of $4000 with the bank carries a compound interest of 8.63% per
annum, the value of your investment at the end of 5 years is: $________________ (two
decimal places) (6,050.75)

An $6000 bank deposit earning annually compounding interest of 6.38% per annum
grows to $_______ (two decimal places) in 3.25 years (7,335.78)

Calculate the effective annual interest rate if you are quoted 7.8% per annum,
compounded half yearly: ______% (two decimal places) (7.95)

What is the price today of an investment that will pay the single sum of $45000 after
three and a half years if the discount rate is 5.89% per annum, compounded annually?
(36,831.57)

You are considering an investment that will pay a lump sum of $41000 at the end of 5
years and you decide that 6.76% per annum compounded monthly is an appropriate
discount factor. What is the value of the investment in today's dollar terms?
$________________ (two decimal places) (29,268.75)
The present value of an annuity of $20000, received at the end of every year for 12
years, where the required rate of return is 4.26% per annum, compounded annually, is:
$_______________ (two decimal places) (184,901.36)

What is the present value of the following cash flow stream, discounted at 6.13% per
annum, compounded monthly?

Year 1: $2000; Year 2: $2000; Year 3: $3000; Year 4: $4000

(9,280.53)

If you make an investment and agree to pay regular monthly payments of $700 at the
end of the next twelve months, starting one month from today, i.e., no payment is made
at the end of the first month, what is the present value of this investment if the interest
rate is 7.4% per annum compounded monthly? $_________________ (two decimal
places) (7,377.06)

● Present annuity after a month:

A property investor receives rental payments of $1500 at the start of each month for 3
years. If the required rate of return is 3.28% per annum, compounded monthly, what is
the value of the property investment today? $_________________ (two decimal places)
(51,501.86)

You are considering an investment that will pay a lump sum of $23000 at the end of 5
years and you decide that 4.05% per annum compounded monthly is an appropriate
discount factor. What is the value of the investment in today's dollar terms?
$________________ (two decimal places) (18,790.19)

The effective annual interest rate corresponding to 7.42% per annum, compounded
monthly is _____% (two decimal places) (7.68)

If you invest $16000 for 4.75 years at 4.29% per annum, with interest compounded
monthly, what will your total investment be worth at the end of the period?
$_______________ (two decimal places) (19,609.23)

If the effective annual interest rate is known to be 4.9% on a debt that has quarterly
payments, the annual percentage rate is ____________% (two decimal places) (4.81 )
An $4000 bank deposit earning annually compounding interest of 8.15% per annum
grows to $_______ (two decimal places) in 6.25 years (6,527.18)

If you make an investment and agree to pay regular monthly payments of $600 at the end of
the next twelve months, starting one month from today, i.e., no payment is made at the end
of the first month, what is the present value of this investment if the interest rate is 7.1% per
annum compounded monthly? $_________________ (two decimal places) ( 6,334.11)

What is the price today of an investment that will pay the single sum of $79000 after three
and a half years if the discount rate is 7.26% per annum, compounded annually? (
61,815.13)

Calculate the effective annual interest rate if you are quoted 6.2% per annum, compounded
half yearly: ______% (two decimal places) (6.3)

What is the present value of the following cash flow stream, discounted at 6.27% per
annum, compounded monthly? Year 1: $1000; Year 2: $2000; Year 3: $3000; Year 4: $5000
($9,084.49)

ANNUITY
The present value of an annuity of $12000, received at the end of every year for 10
years, where the required rate of return is 4.81% per annum, compounded annually, is:
$_______________ (two decimal places) (93,521.78)

If you are saving for an overseas trip and put $400 every month into an account paying
4.49% per annum, compounding monthly, how much will you have at the end of 5.25
years? $_________________ (two decimal places) (28,358.43)

If you borrow $15000 for 3 years at an annually compounding rate of 6.72% per annum,
what is the total interest on the loan if the interest due is added to the principal over the
period and repaid at the maturity date? Total interest = $___________ (two decimal
places) ( 3,231.76 )
If you borrow $22000 for 6 years at an interest rate of 7.55% per annum, with the
interest compounding quarterly, how much will you have to pay at the end of the period?
$_______________ (two decimal places) ( 34,460.73)

Module 9

1.7/0.96=

A French importer has entered into a contract under which it will require payment in
GBP in one month. The company is concerned at its exposure to foreign exchange risk
and decides to enter into a forward exchange contract with its bank. Given the following
(simplified) data, calculate the forward rate offered by the bank (round your answer to 4
decimal places and do not enter the three character currency codes). Both countries
use a 365-day year; assume a 30 day contract.

EUR/GBP (spot): 0.7360-69

One-month French interest rate: 4.85% p.a.

One-month UK interest rate: 3.65% p.a.

(0.7353)

A French importer has entered into a contract under which it will require payment in
GBP in one month. The company is concerned about its exposure to foreign exchange
risk and decides to enter into a forward exchange contract with its bank. Given the
following (simplified) data, calculate the forward rate offered by the bank (round your
answer to 4 decimal places and do not enter the three-character currency codes). Both
countries use a 365-day year; assume 30-day contract (0.7654)
EUR/GBP (spot): 0.7660-69

One-month French interest rate: 4.45% p.a.

One-month UK interest rate: 3.55% p.a.

Calculate the current EUR/JPY offer exchange rate, (rounded to two decimal places)
given these two quotes: (126.79)

USD/EUR 0.9220-30

USD/JPY 116.80-90

An FX dealer is quoting AUD/USD 0.6473-78.

Transpose the quotation. What is the dealer's bid now? (do not enter the currency
codes)

(1.5437)
𝐴 𝐴 𝐶
𝐵
= 𝐶
* 𝐵

𝑈𝑆𝐷 𝑈𝑆𝐷 𝑁𝑍𝐷

𝐴𝑈𝐷(𝐴/𝐵)
= 𝑁𝑍𝐷(𝐴/𝐶)
* 𝐴𝑈𝐷(𝐶/𝐵)

Module 10
An Australian based importer has entered into a US dollar denominated contract that
will require payment of US$10,000,000 in one month. The importer wishes to lock in an
exchange rate today in order to protect its future profit margins. An investment bank
gives the following quote for spot and one month forward rates: AUD/USD 0.3440–47
12:17. Calculate the one-month forward exchange rate relevant for the importer.
(0.3452)

An Australian based importer has entered into a US dollar denominated contract that
will require payment of US$10,000,000 in one month. The importer wishes to lock in an
exchange rate today in order to protect its future profit margins. An investment bank
gives the following quote for spot and one-month forward rates: AUD/USD 0.4140–47
11:17. Calculate the one-month forward exchange rate relevant for the importer.
(0.4151)

An Australian based importer has entered into a US dollar denominated contract that
will require payment of US$10,000,000 in one month. The importer wishes to lock in an
exchange rate today in order to protect its future profit margins. An investment bank
gives the following quote for spot and one month forward rates: AUD/USD 0.6440–47
10:17. Calculate the one-month forward exchange rate relevant for the importer.
(0.6450)

Parramatta Enterprises (PE) shares currently trade at $2.10. An investor enters into a
call option on PE shares with an exercise price of $2.30 per share in two months, and a
premium of $0.35 per share What is the breakeven price of the option. (2.65)

Parramatta Enterprises (PE) has recently issued $18 million in floating rate notes in
order to fund the next stage of an investment project. The notes pay an annual coupon
of BBSW plus 120 basis points. The company approaches Commonwealth Bank
(CBA) to establish an intermediated vanilla swap. The swap contract sets a fixed rate of
7.30 per cent per annum and a reference rate of the 12-month BBSW. At the first
interest payment date, the BBSW is 7.85 per cent per annum. How much is PE
required to pay CBA at the first interest payment date? (two decimal places, a negative
number indicates that PE receives the payment) (-99,000.00)

Parramatta Enterprises (PE) has recently issued $15 million in floating rate notes in
order to fund the next stage of an investment project. The notes pay an annual coupon
of BBSW plus 170 basis points. The company approaches Commonwealth Bank (CBA)
to establish an intermediated vanilla swap. The swap contract sets a fixed rate of 7.00
per cent per annum and a reference rate of the 12-month BBSW.At the first interest
payment date, the BBSW is 7.65 per cent per annum. How much is PE required to pay
CBA at the first interest payment date? (two decimal places, a negative number
indicates that PE receives the payment) (-97,500.00)
Module 11
A business intends to use 90-day bank-accepted bill futures to hedge the interest rate
risk resulting from its plans to borrow approximately $40 million using the issue of
commercial paper in three months. The yield on commercial paper is currently 6.37%
p.a. and the 90-day bank-accepted bill futures are currently priced at 95.25. The
effective cost of funds if, in three months time the yield on commercial paper is 7.8%
p.a. and the 90-day bank-accepted bill futures contract is priced at 94.78, is ______ %
p.a. (rounded to two decimal places) (7.32)

A fund manager expects to have funds to invest in three months' time and plans to buy
$1 million corporate bonds, currently yielding 7.00% p.a. The manager hedges their
interest rate risk using three-year Treasury bond futures contracts, currently priced at
94.500. In three months' time the fund manager buys $1 million corporate bonds at yield
of 6.84% p.a. and closes out their futures market position at 94.250. What is the profit
from closing out the futures position. ( -6,856.28)

What is the value of an investor's (well diversified) portfolio following a fall in the
S&P/ASX Index from 7300 to 6150, if the initial portfolio value was $30 million and the
investor used S&P/ASX 200 Index futures contracts to hedge the portfolio?
(29,988,972.60)

A business intends to use 90-day bank-accepted bill futures to hedge the interest rate
risk resulting from its plans to borrow approximately $30 million using the issue of
commercial paper in three months. The yield on commercial paper is currently 6.83%
p.a. and the 90-day bank-accepted bill futures are currently priced at 95.15.

The effective cost of funds if, in three months time the yield on commercial paper is
7.4% p.a. and the 90-day bank-accepted bill futures contract is priced at 94.50, is
______ % p.a. (rounded to two decimal places) (6.74)
ANSWER