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Answer the 52 questions on the attached file.
52_questions.docx

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Consider a bond with a coupon rate of 10% and annual coupons. The par value is
\$1,000, and the bond has 10 years to maturity. The yield to maturity (return to
bondholder) is 10%. What is the value of the bond?
\$1,000
\$980
\$950
\$1,105
Consider a bond with a 10% semiannual coupon bond, 15 years to maturity, and a par
value of \$1,000. The current price is \$1028.09. What is the yield to maturity?
10.25%
9.02%
8.59%
9.64%
Consider a bond with a 10% semi-annual coupon bond, 15 years to maturity, and a par
value of \$1,000. The current price is \$1028.09. What is the current yield?
10.28%
9.73%
9.64%
10%
Consider a bond with a 10% semi-annual coupon bond, 15 years to maturity, and a par
value of \$1,000. The current price is \$1028.09. What is the capital gain yield?
-0.085%
1.33%
-1.22%
1.22%
The principal amount of a bond that is repaid at the end of the loan term is called the
bond’s
maturity
face value
coupon rate
coupon
yield to maturity
The rate of return required by investors in the market for owning a bond is called the
Face value
Yield to maturity
Coupon
Maturity
Coupon rate
A bond with a 7% coupon that pays interest semiannually and is priced at par will have
a market price of _____ and interest payments in the amount of _____ each.
\$1,000; \$7
\$1,000; \$35
\$1,070; \$35
\$1,070; \$70
\$1,007; \$70
Your firm offers a 10-year, zero coupon bond. The yield to maturity is 8.61%. What is
the current market price of a \$1,000 face value bond?
\$833.26
\$915.12
\$430.24
\$473.06
\$1,081.05
A corporate bond with a face value of \$1,000 matures in 4 years and has an 8% coupon
paid at the end of each year. The current price of the bond is \$932. What is the yield to
maturity for this bond?
5.85%
6.18%
10.15%
8.38%
A AAA firm’s bonds will mature in eight years, and the coupon is \$65. The YTM is 8.2%.
What is the Bond’s market value?
\$1,048.43
\$903.04
\$912.58
\$925.12
What will be the FV of \$500 in 3 years at an interest rate of 5%?
\$550.41
\$582.95
\$680.25
\$578.81
You have \$100 but need \$180 four years later. To achieve this goal, how much should
the interest rate be?
15.38%
16.66%
16.51%
15.83%
The mortgage quoted rate is 6% annually. How much is the actual rate? (Hint: The
mortgage is paid monthly.)
6.00%
6.57%
6.17%
6.47%
What is the NPV of the following cash flows. The discount rate is 5%.
Year CF
1
0
2
0
3
100
4
100
5
200
\$301.05
\$364.33
\$325.36
\$350.92
At 4% interest, how long would it take to triple your money?
Year CF
1
0
2
0
3
100
4
100
5
200
26.64 years
29.01 years
27.27 years
28.01 years
You are borrowing \$18,000 to buy a car. The terms of the loan call for monthly
payments for 5 years at 6 percent interest (APR=5%). What is the actual (effective)
annual rate?
5%
5.04%
5.12%
5.25%
An insurance company is offering a new policy to its customers. The detail of the policy
is as follows. The purchaser makes the following five payments to the company.
First year \$500
Second year \$600
Third year \$700
Third year \$700
Fourth year \$800
Fifth year \$900
Assume that the interest rate is 10%. How much is the lump sum value of the five
payments as of today?
2,500.00
2728.51
\$2,988.43
2,898.93
What is the nominal annual rate (APR) if a bank charges you a 4 percent actual rate
(EAR=4%) compounded weekly (52 weeks a year)?
3.62%
3.92%
3.72%
3.84%
Your sister turned 30 today, and she is planning to save \$7,000 per year for retirement,
with the first deposit to be made one year from today. She will invest in a mutual fund
that’s expected to provide a return of 8% per year. She plans to retire 35 years from
today, when she turns 65, and she expects to live for 25 years after retirement, to age
90. Under these assumptions, how much can she spend each year after she
retires? Her first withdrawal will be made at the end of her first retirement year.
\$112,997
\$108,179
\$98,601
\$161,686
You agree to make 24 deposits of \$500 at the beginning of each month into a bank
account. At the end of the 24th month, you will have \$13,000 in your account. If the bank
compounds interest monthly, what nominal annual interest rate will you be earning?
8.00%
8.82%
8.40%
7.62%
You are given the investment alternatives. Assume a 20% discount rate. How much is
the NPV?
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
\$0
\$0
\$5000
\$3000
\$2000
\$8000
\$8,804.11
\$7,492.50
\$8,514.18
\$7,823.22
You are given the investment alternatives. Assume 20% discount rate. How much is the
NFV (value by the end of year 6)?
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
\$18,000
\$23,360
\$23,880
\$0
\$0
\$5000
\$3000
\$2000
\$8000
\$24,470
Beta of stock A = 1.0; Beta of stock B = 1.5. Pick the correct answer.
Stock B’s return > stock A’s return