1) CBA arranges financing for Super Duper Pty Ltd with a 90 day bank bill with a face value of $500000. City Investments buy the bill when it is first issued at a yield of 3.25% p.a. and sell it 30 days later to Prudential Investments at a yield of 3.65% pa . What price does City Investments pay for the bill? (a. $496,025.01 b.$484,261.50 c.$495,540.14 d.$498,667.94 e. $500,000.00 )
2) A government bond with a face value of $500,000 was issued eight years ago and there are seven years remaining until maturity. The bond pays semi-annual coupon payments of $22,500, the coupon rate is 9% p.a. paid twice yearly and rates in the marketplace are 9.6% pa compounded semi-annually. What is the value of the bond today?
3) According to the prospectus of New Start Ltd, the company anticipates paying its first dividend of $0.85 in 5 years time, and thereafter expects the dividend to increase by 4% each year indefinitely. If the required return is 15%, what is the current value of a New Start share today?
4) Vanderlay Industries (VI) requires equity financing to fund a special project. They have decided to conduct a renounceable rights issues to raise $5.86 million funding. VI will set the subscription price to the rights issues at $2.20 per share. The current share price is $2.80per share and there are currently 8million shares on issue. How many shares does a VI shareholder need to own to receive one right? (a. 2.8 b. 4 c.8,000,000 d.3 e.5 )