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QUESTION 18Suppose you just won...

QUESTION 18Suppose you just won the state lottery, and you have a choice between receiving $2,025,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.

11.71%

10.74%

13.43%

12.57%

12.24%

1 points Save Answer

QUESTION 19Master Card and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 17.75%, with interest paid monthly, what is the card's EFF%?

19.85%

20.23%

22.54%

19.27%

21.77%

1 points Save Answer

QUESTION 20Suppose you are buying your first condo for $240,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?

$1,507.48

$1,578.59

$1,749.25

$1,422.15

$1,237.27

1 points Save Answer

QUESTION 21Which of the following statements is CORRECT?

All else equal, if a bond's yield to maturity increases, its current yield will fall.

A zero coupon bond's current yield is equal to its yield to maturity.

If a bond's yield to maturity exceeds its coupon rate, the bond will sell at par.

If a bond's yield to maturity exceeds its coupon rate, the bond will sell at a premium over par.

All else equal, if a bond's yield to maturity increases, its price will fall.

1 points Save Answer

QUESTION 22Adams Enterprises' bonds currently sell for $1,480. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity?

4.02%

4.14%

4.51%

5.05%

4.60%

1 points Save Answer

QUESTION 23Sadik Inc.'s bonds currently sell for $1,270 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?

5.89%

6.71%

4.65%

6.06%

4.77%

1 points Save Answer

QUESTION 24Malko Enterprises' bonds currently sell for $1,410. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield?

6.60%

5.32%

5.53%

4.63%

4.10%

1 points Save Answer

QUESTION 25Assume that you are considering the purchase of a 20-year, bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 8.8% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

$1,299.71

$1,065.34

$926.84

$1,310.36

$990.76

1 points Save Answer

QUESTION 26Which of the following would NOT be considered as a real asset?

A factory.

A Machine.

A Computer.

A patent.

A Corporate bond.

1 points Save Answer

QUESTION 27Brown Office Supplies recently reported $19,000 of sales, $8,250 of operating costs other than depreciation, and $1,750 of depreciation. It had $9,000 of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's earnings before taxes (EBT)?

$7,952

$10,463

$9,960

$8,370

$7,366

1 points Save Answer

QUESTION 28Question 82 Exam 1Scranton Shipyards has $15.5 million in total investor-supplied operating capital, and its WACC is 10%. Scranton has the following income statement: What is Scranton's EVA?

$1,062,500

$850,000

$680,000

$807,500

$935,0001 points Save Answer

QUESTION 29Kop Corporation's 5-year bonds yield 6.50%, and T-bonds with the same maturity yield 4.80%. The default risk premium for Kop's bonds is DRP = 0.40%, the liquidity premium on Kop's bonds is LP = 1.30% versus zero on T-bonds, the inflation premium (IP) is 1.50%, and the maturity risk premium (MRP) on 5-year bonds is 0.40%. What is the real risk-free rate, r*?

3.07%

2.44%

2.90%

2.35%

2.99%

1 points Save Answer

QUESTION 30You observe that a firm's ROE is above the industry average, but its profit margin and debt ratio are both below the industry average. Which of the following statements is CORRECT?

Its return on assets must equal the industry average.

Its total assets turnover must be below the industry average.

Its total assets turnover must equal the industry average.

Its total assets turnover must be above the industry average.

Its TIE ratio must be below the industry average.

1 points Saved

11.71%

10.74%

13.43%

12.57%

12.24%

1 points Save Answer

QUESTION 19Master Card and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 17.75%, with interest paid monthly, what is the card's EFF%?

19.85%

20.23%

22.54%

19.27%

21.77%

1 points Save Answer

QUESTION 20Suppose you are buying your first condo for $240,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?

$1,507.48

$1,578.59

$1,749.25

$1,422.15

$1,237.27

1 points Save Answer

QUESTION 21Which of the following statements is CORRECT?

All else equal, if a bond's yield to maturity increases, its current yield will fall.

A zero coupon bond's current yield is equal to its yield to maturity.

If a bond's yield to maturity exceeds its coupon rate, the bond will sell at par.

If a bond's yield to maturity exceeds its coupon rate, the bond will sell at a premium over par.

All else equal, if a bond's yield to maturity increases, its price will fall.

1 points Save Answer

QUESTION 22Adams Enterprises' bonds currently sell for $1,480. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity?

4.02%

4.14%

4.51%

5.05%

4.60%

1 points Save Answer

QUESTION 23Sadik Inc.'s bonds currently sell for $1,270 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?

5.89%

6.71%

4.65%

6.06%

4.77%

1 points Save Answer

QUESTION 24Malko Enterprises' bonds currently sell for $1,410. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield?

6.60%

5.32%

5.53%

4.63%

4.10%

1 points Save Answer

QUESTION 25Assume that you are considering the purchase of a 20-year, bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 8.8% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

$1,299.71

$1,065.34

$926.84

$1,310.36

$990.76

1 points Save Answer

QUESTION 26Which of the following would NOT be considered as a real asset?

A factory.

A Machine.

A Computer.

A patent.

A Corporate bond.

1 points Save Answer

QUESTION 27Brown Office Supplies recently reported $19,000 of sales, $8,250 of operating costs other than depreciation, and $1,750 of depreciation. It had $9,000 of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's earnings before taxes (EBT)?

$7,952

$10,463

$9,960

$8,370

$7,366

1 points Save Answer

QUESTION 28Question 82 Exam 1Scranton Shipyards has $15.5 million in total investor-supplied operating capital, and its WACC is 10%. Scranton has the following income statement: What is Scranton's EVA?

$1,062,500

$850,000

$680,000

$807,500

$935,0001 points Save Answer

QUESTION 29Kop Corporation's 5-year bonds yield 6.50%, and T-bonds with the same maturity yield 4.80%. The default risk premium for Kop's bonds is DRP = 0.40%, the liquidity premium on Kop's bonds is LP = 1.30% versus zero on T-bonds, the inflation premium (IP) is 1.50%, and the maturity risk premium (MRP) on 5-year bonds is 0.40%. What is the real risk-free rate, r*?

3.07%

2.44%

2.90%

2.35%

2.99%

1 points Save Answer

QUESTION 30You observe that a firm's ROE is above the industry average, but its profit margin and debt ratio are both below the industry average. Which of the following statements is CORRECT?

Its return on assets must equal the industry average.

Its total assets turnover must be below the industry average.

Its total assets turnover must equal the industry average.

Its total assets turnover must be above the industry average.

Its TIE ratio must be below the industry average.

1 points Saved

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