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If American Express, in their investor relations report describe their worldwide transaction volume as $1.1 trillion, and say their average discount rate is 2.43%, how do they arrive at a discount revenue of around $19 billion, as opposed to around $27 billion (i.e. 2.43% of 1.1 trillion)?

How can cross currency swaps or derivatives be used to help a country hide its debt? How did Goldman Sachs do this in Greece’s case?

Consider the following information:

Bear Market Normal Market Bull Market

Probability 0.3 0.5 0.2

Return on Stock A -10% 0% 40%

Return on Stock B -5% 5% 50%

Calculate and comment upon the expected return and standard deviation of A and B.

Bear Market Normal Market Bull Market

Probability 0.3 0.5 0.2

Return on Stock A -10% 0% 40%

Return on Stock B -5% 5% 50%

Calculate and comment upon the expected return and standard deviation of A and B.

1) If a firm borrows £20 million for one year at an interest rate of 4%, approximately what is

the present value of the interest tax shield? Assume a 20% marginal corporate tax rate.

2) What is the standard deviation of the portfolio that consists of A and B shares?

Firm Expected Return Standard Deviation Percentage of portfolio Correlation

A 20% 40% 60% 0.2

B 10% 20% 40% 0.2

the present value of the interest tax shield? Assume a 20% marginal corporate tax rate.

2) What is the standard deviation of the portfolio that consists of A and B shares?

Firm Expected Return Standard Deviation Percentage of portfolio Correlation

A 20% 40% 60% 0.2

B 10% 20% 40% 0.2

Tax agents have a responsibility to ensure that their clients’ returns are prepared within the established timelines. What role do timelines have in satisfying client expectations and how would you develop a timeline to fulfil your obligations? 120–150 words.

1) An investor was originally expecting a 16% return on her portfolio with beta of 1.25 before

the market risk premium decreased from 8% to 6%. Given this change, what return will

now be expected on the portfolio?

2) John PLC is financed by debt and equity. The market value of its debt is £8 million and

its equity £12 million. If John’s cost of debt is 6% and the required rate of return on

equity is 12%, its Weighted Average Cost of Capital (WACC) is (assume there is no tax):

the market risk premium decreased from 8% to 6%. Given this change, what return will

now be expected on the portfolio?

2) John PLC is financed by debt and equity. The market value of its debt is £8 million and

its equity £12 million. If John’s cost of debt is 6% and the required rate of return on

equity is 12%, its Weighted Average Cost of Capital (WACC) is (assume there is no tax):

Stock A is currently earning a return of 10% and has a beta of 0. 75, whilst Stock B is

earning 15% and has a beta of 1.5. The rate of return on the market is 12% and a risk

free asset yields 5%. According to the CAPM:

a. Stocks A and B are earning equilibrium returns

b. Stock A is overpriced and stock B is underpriced

c. Stock A is underpriced and stock B is overpriced

d. Socks A and B are overpriced

.Firm A has a value of £200 million and Firm B has a value of £140 million. Merging the

two companies would allow cost savings with a present value of £30 million. If Firm A

purchases Firm B for £150 million, how much do the shareholders of firm A gain from this

merger:

a. £20 million

b. £30 million

c. £40 million

d. £50 million

earning 15% and has a beta of 1.5. The rate of return on the market is 12% and a risk

free asset yields 5%. According to the CAPM:

a. Stocks A and B are earning equilibrium returns

b. Stock A is overpriced and stock B is underpriced

c. Stock A is underpriced and stock B is overpriced

d. Socks A and B are overpriced

.Firm A has a value of £200 million and Firm B has a value of £140 million. Merging the

two companies would allow cost savings with a present value of £30 million. If Firm A

purchases Firm B for £150 million, how much do the shareholders of firm A gain from this

merger:

a. £20 million

b. £30 million

c. £40 million

d. £50 million

An investor was originally expecting a 16% return on her portfolio with beta of 1.25 before

the market risk premium decreased from 8% to 6%. Given this change, what return will

now be expected on the portfolio?

Stock A is currently earning a return of 10% and has a beta of 0. 75, whilst Stock B is

earning 15% and has a beta of 1.5. The rate of return on the market is 12% and a risk

free asset yields 5%. According to the CAPM:

a. Stocks A and B are earning equilibrium returns

b. Stock A is overpriced and stock B is underpriced

c. Stock A is underpriced and stock B is overpriced

d. Socks A and B are overpriced

Firm A has a value of £200 million and Firm B has a value of £140 million. M

erging the

two companies would allow cost savings with a present value of £30 million. If Firm A

purchases Firm B for £150 million, how much do the shareholders of firm A gain from this

merger:

the market risk premium decreased from 8% to 6%. Given this change, what return will

now be expected on the portfolio?

Stock A is currently earning a return of 10% and has a beta of 0. 75, whilst Stock B is

earning 15% and has a beta of 1.5. The rate of return on the market is 12% and a risk

free asset yields 5%. According to the CAPM:

a. Stocks A and B are earning equilibrium returns

b. Stock A is overpriced and stock B is underpriced

c. Stock A is underpriced and stock B is overpriced

d. Socks A and B are overpriced

Firm A has a value of £200 million and Firm B has a value of £140 million. M

erging the

two companies would allow cost savings with a present value of £30 million. If Firm A

purchases Firm B for £150 million, how much do the shareholders of firm A gain from this

merger:

Jan is risk-averse, but wants to earn the best rate of return in less than two years. Which investment would MOST LIKELY meet Jan's need?

Place the following events in the order they might occur once rent control is implemented in a crowded, impoverished neighborhood.

Drag the items below into the box above in the correct order, starting with the first item in the sequence.

Apartment rental prices are capped by the local government.

Property owners receive less income from their properties.

Many apartment buildings become dilapidated.

Property owners cannot afford to maintain buildings properly.

Drag the items below into the box above in the correct order, starting with the first item in the sequence.

Apartment rental prices are capped by the local government.

Property owners receive less income from their properties.

Many apartment buildings become dilapidated.

Property owners cannot afford to maintain buildings properly.