BU340 Lesson 8 Exam SCORE 100 PERCENT

Online Exam 8
Question 1        0 / 5 points
Which of the statements below is true?
Question options:

Investors want to maximize return and maximize risk.

Investors want to maximize return and minimize risk.  (*This is correct)

Investors want to minimize return and maximize risk.

Investors want to minimize return and minimize risk.
Question 2        5 / 5 points
The practice of not putting all of your eggs in one basket is an illustration of:
Question options:

variance.

diversification.

portion control.

expected return.
Question 3        5 / 5 points
The security market line has:
Question options:

a positive slope.

a negative slope.

no slope.

a beta of 1.0.
Question 4        5 / 5 points
Given an expected market return of 12.0%, a beta of 0.75 for Benson Industries, and a risk-free rate of 4%, what is the expected return for Benson Industries?
Question options:

13%

10%

9%

4%
Question 5        5 / 5 points
For most stocks, the correlation coefficient with other stocks is:
Question options:

positive.

negative.

zero.

The distribution of correlation coefficients between stocks is uniform from -1.0 to +1.0.
Question 6        5 / 5 points
Stocks A, B, C, and D have standard deviations, respectively, of 20%, 5%, 10%, and 15%. Which one is the riskiest?
Question options:

Stock A

Stock B

Stock C

Stock D
Question 7        5 / 5 points
Travis bought a share of stock for $31.50 that paid a dividend of $.85 and sold six months later for $27.65. What was his dollar profit or loss and holding period return?
Question options:

-$3.00, -9.52%

-$3.85, -12.22%

-$.85, -2.70%

-$3.85, -9.52%
Question 8        5 / 5 points
__________ may be defined as a measure of uncertainty in a set of potential outcomes for an event in which there is a chance for some loss.
Question options:

Diversification

Risk

Uncertainty

Collaboration
Question 9        5 / 5 points
The __________ is the intercept on the security market line.
Question options:

prime rate

risk-free rate

market rate of return

beta
Question 10        5 / 5 points
Which of the following investments is considered to be default risk-free?
Question options:

Currency options

AAA-rated corporate bonds

Common stock

Treasury bills
Question 11        5 / 5 points
Correlation, a standardized measure of how stocks perform relative to one another in different states of the economy, has a range from:
Question options:

0.0 to +10.0.

0.0 to +1.0.

-1.0 to +1.0.

There is no range; correlation is a calculated number that can take on any value.
Question 12        5 / 5 points
Jarvis bought a share of stock for $15.75 that paid a dividend of $.45 and sold three months later for $18.65. What was his dollar profit or loss and holding period return?
Question options:

$2.90, 18.41%

$3.35, 21.27%

-$2.90, -18.41%

$.45, 2.86%
Question 13        5 / 5 points
Find the variance for a security that has three one-year returns of 5%, 10%, and 15%.
Question options:

10%

16.67%

25%

30%
Question 14        5 / 5 points
Find the variance for a security that has three one-year returns of -5%, 15%, and 20%.
Question options:

175%

75%

58.33%

25%
Question 15        5 / 5 points
Use the following table:
States of the Economy    Probability of the State    3-Month T-Bill    Large-Company Stock    Small-Company Stock
Boom    0.3    4    10    30
Steady    0.5    4    5    20
Recession    0.2    4    0    10
What is the difference between the variances for large- and small-company stocks?
Question options:

40.25%

36.75%

27.30%

14.90%
Question 16        5 / 5 points
The correlation coefficient, a measurement of the comovement between two variables, has what range?
Question options:

From 0.0 to +10.0

From 0.0 to +1.0

From -1.0 to +10.0

From =1.0 to -1.0
Question 17        0 / 5 points
Stock    A    B    C    D
Expected Return    5%    5%    7%    6%
Standard Deviation    10%    12%    12%    11%
Which of the following statements is true?
Question options:

A is a better investment than B.

B is a better investment than C.

C is a better investment than D.

D is a better investment than C.
Question 18        5 / 5 points
Unsystematic risk:
Question options:

is also known as nondiversifiable risk.

can be diversified away.

is system-wide risk.

is equal to 2 times the systematic risk.
Question 19        5 / 5 points
Which of the following statements is true about variance?
Question options:

Variance describes how spread out a set of numbers or values are around its mean or average.

Variance is essentially the variability from the average.

The larger the variance, the greater the dispersion.

All of the above statements are true.
Question 20        5 / 5 points
Assume the following information about the market and JumpMasters' stock. JumpMasters' beta = 1.50, the risk-free rate is 3.5%, the market risk premium is 10%. Using the SML, what is the expected return for JumpMasters' stock?
Question options:

7.5%

13.5%

18.5%

27%

BU340 Lesson 6 & 7 Exam SCORE 95 PERCENT

Online Exam 6
Question 1        2.5 / 2.5 points
Moody's has developed a corporate bond default-risk rating system using capital and lowercase letters and numbers. Below are several examples of Moody's ratings. Which answer choice lists a collection of ratings for "high credit investment grade" bonds?
Question options:

Baa1, A1, A3

Ba1, Baa2, Baa3

Aa2, Aa3, A1

Caa, Ca, C
Question 2        2.5 / 2.5 points
A bond is a __________ instrument by which a borrower of funds agrees to pay back the funds with interest on specific dates in the future.
Question options:

long-term equity

long-term debt

short-term debt

short-term equity
Question 3        2.5 / 2.5 points
When a company is in financial difficulty and cannot fully pay all of its creditors, the first lenders to be paid are the:
Question options:

stockholders.

sinking fund holders.

juniordebtholders.

seniordebtholders.
Question 4        2.5 / 2.5 points
The __________ is the regular interest payment of the bond.
Question options:

dividend

par

coupon rate

coupon
Question 5        2.5 / 2.5 points
As the rating of a bond increases (for example, from A, to AA, to AAA), it generally means that:
Question options:

the credit rating increases, the default risk increases, and the required rate of return decreases.

the credit rating increases, the default risk decreases, and the required rate of return increases.

the credit rating increases, the default risk decreases, and the required rate of return decreases.

the credit rating decreases, the default risk decreases, and the required rate of return decreases.
Question 6        2.5 / 2.5 points
The __________ is the interest rate printed on the bond.
Question options:

coupon rate

semiannual coupon rate

yield to maturity

compound rate
Question 7        2.5 / 2.5 points
The difference between the price and the par value of a zero-coupon bond represents:
Question options:

taxes payable by the bond buyer.

the accumulated principal over the life of the bond.

the bond premium.

the accumulated interest over the life of the bond.
Question 8        2.5 / 2.5 points
Bonds are sometimes called __________ securities because they pay set amounts on specific future dates.
Question options:

variable-income

fixed-income

bully

real
Question 9        2.5 / 2.5 points
From 1980 to 2006, the default risk premium differential between Aaa-rated bonds and Aa-rated bonds has averaged between:
Question options:

50 to 150 basis points.

90 to 190 basis points.

120 to 220 basis points.

250 to 350 basis points.
Question 10        2.5 / 2.5 points
"Junk" bonds are a street name for __________ grade bonds.
Question options:

investment

speculative

extremely speculative

speculative and investment
Question 11        2.5 / 2.5 points
When the __________ is less than the yield to maturity, the bond sells at a/the __________ the par value.
Question options:

coupon rate; premium over

coupon rate; discount to

time to maturity; discount to

time to maturity; same price as
Question 12        2.5 / 2.5 points
Delagold Corporation is issuing a zero-coupon bond that will have a maturity of 50 years. The bond's par value is $1,000, and the current yield on similar bonds is 7.5%. What is the expected price of this bond, using the semiannual convention?
Question options:

$25.19

$250.19

$750

$1,000
Question 13        2.5 / 2.5 points
When real property is used as collateral for a bond, it is termed a/an:
Question options:

debenture.

mortgaged security.

indenture.

senior bond.
Question 14        2.5 / 2.5 points
Zero-coupon U.S. Government bonds are known as:
Question options:

STRIPS.

muni-bonds.

Uncle Sam's Empty Pockets.

BLANKS.
Question 15        2.5 / 2.5 points
With a bearer bond, whoever held it was entitled to the __________ and the __________.
Question options:

interest payments; principal

dividend payments; principal

interest payments; dividend payments

interest payments; voting rights
Question 16        2.5 / 2.5 points
Espresso Petroleum Inc. has a contractual option to buy back, prior to maturity, bonds the firm issued five years ago. This is an example of what type of bond?
Question options:

Putable bond

Callable bond

Convertible bond

Junior bond
Question 17        2.5 / 2.5 points
Which of the following is NOT an example of a bond that contains an option feature?
Question options:

Callable bond

Putable bond

Convertible bond

The above are all examples of bonds with option features.
Question 18        2.5 / 2.5 points
The __________ is the expiration date of the bond.
Question options:

future value

yield to maturity

maturity date

coupon
Question 19        2.5 / 2.5 points
The __________ is the annual coupon payment divided by the current price of the bond, and is not always an accurate indicator.
Question options:

current yield

yield to maturity

bond discount rate

coupon rate
Question 20        2.5 / 2.5 points
Which of the following statements about the relationship between yield to maturity and bond prices is false?
Question options:

When the yield to maturity and coupon rate are the same, the bond is called a par value bond.

A bond selling at a premium means that the coupon rate is greater than the yield to maturity.

When interest rates go up, bond prices go up.

A bond selling at a discount means that the coupon rate is less than the yield to maturity.
Online Exam 7
Question 21        2.5 / 2.5 points
The __________ is the market of first sale in which companies first sell
their authorized shares to the public.
Question options:

primary market

secondary market

bull market

Nasdaq market
Question 22        2.5 / 2.5 points
Which of the statements below is true?
Question options:

The profits for common stock owners come after payment to the employees, suppliers, government, and creditors.

Shareholders elect the board of directors, which ultimately selects the bondholder team that runs the day-to-day operations of the company.

Stock is a minor financing source for public companies.

Stockholders are paid before debtholders (bondholders) if a company fails.
Question 23        2.5 / 2.5 points
__________ means that the percentage increase in the dividend is the same each year.
Question options:

Constant growth

Inconsistent growth

No growth

A constant cash flow
Question 24        2.5 / 2.5 points
Which of the statements below is true?
Question options:

A problem with using the dividend growth model is that it appears to underestimate the expected return for all stocks.

A problem with using the dividend growth model is that it produces a negative expected return whenever a firm cuts dividends.

A problem with using the dividend growth model is that it produces a positive expected return whenever a firm cuts dividends.

A problem with using the dividend growth model is that it produces a negative expected return whenever a firm increases its dividends.
Question 25        2.5 / 2.5 points
If we know the dividend stream, the future price of the stock, the future selling date of the stock, and the required return, we can price stocks just as we priced:
Question options:

annuities.

perpetuities.

bonds.

preferred stocks.
Question 26        2.5 / 2.5 points
Which of the statements below is FALSE? Answer:
Question options:

The dividend model requires that a firm have a cash dividend history and that the dividend history shows a constant dividend or a positive growth in dividends.

A problem with using the dividend growth model is that it appears to underestimate the expected return for some stocks.

A problem with using the dividend growth model is that it produces a negative expected return whenever a firm cuts its dividends.

A problem with using the dividend growth model is that it appears to underestimate the expected return for all stocks.
Question 27        2.5 / 2.5 points
You can think of the __________ as the "used stock" market because these shares have been owned or "used" previously.
Question options:

secondary market

primary market

NYSE market

initial public offering market
Question 28        2.5 / 2.5 points
The hiring process for an investment banker can happen in two ways. Which of the below is one of these ways?
Question options:

Randomly choose an investment banking firm from a list of underwriting firms.

Pick a desirable investment banking firm, usually basing the choice on the reputation and history of the banker in its particular industry.

Have the primary government regulator of your industry choose the best investment banking firm for your company.

Solicit advice from a government agency and use it as your primary guide in choosing an investment banker.
Question 29        2.5 / 2.5 points
Strong-form efficient markets theory proclaims that:
Question options:

one can chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market.

one can exploit publicly available news or financial statement information to routinely outperform the market.

current prices reflect the price and volume history of the stock, all publicly available information, and all private information.

current prices reflect the price and volume history of the stock, all publicly available information, but no private information.
Question 30        2.5 / 2.5 points
You buy a stock for which you expect to receive an annual dividend of $2.10 for the 15 years that you plan on holding it. After 15 years, you expect to sell the stock for 32.25. What is the present value of a share for this company if you want a 10% return?
Question options:

$7.72

$15.97

$23.69

$31.41
Question 31        2.5 / 2.5 points
You want to invest in a stock that pays $6 annual cash dividends for the next five years. At the end of the five years, you will sell the stock for $30. If you want to earn 10% on this investment, what is a fair price for this stock if you buy it today?
Question options:

$41.37

$40.37

$22.75

$18.63
Question 32        2.5 / 2.5 points
A typical practice of many companies is to distribute part of the earnings to shareholders through:
Question options:

quarterly stock splits.

quarterly cash dividends.

semiannual cash dividends.

annual stock dividends.
Question 33        2.5 / 2.5 points
Shortcomings of the dividend pricing models suggest that we need a pricing model that is more inclusive than the dividend models and provides expected returns for companies based on aspects besides their historical dividend patterns. Which of the below is NOT one of these aspects?
Question options:

The company's risk

The premium for taking on risk

The reward for waiting

Stable dividends
Question 34        0 / 2.5 points
__________ has to do with the speed and accuracy of processing a buy or sell order at the best available price.
Question options:

Market efficiency

Mechanical efficiency

Informational efficiency

Operational efficiency
Question 35        2.5 / 2.5 points
Which of the statements below is FALSE?
Question options:

In estimating the current price using the constant growth dividend <br /> model, we let g be the growth rate on the dividend stream and r be the <br /> rate of return required by the potential buyer of the stock.

Constant growth means that the percentage increase in the dividend is <br /> the same each year.

<p>Div₀ refers to the dividends that were just been paid to the current owner of the stock.</p>

One unlikely dividend pattern is to raise or grow dividends by a fixed <br /> amount at fixed intervals.
Question 36        2.5 / 2.5 points
In the United States, there are three well-known secondary stock markets. Which of the below is NOT one of these?
Question options:

The New York Stock Exchange (NYSE)

The Chicago Stock Exchange (CSE)

The National Association of Securities Dealers and their trading system NASDAQ (National Association of Securities Dealers Automated Quotation System)

The American Stock Exchange (AMEX)
Question 37        2.5 / 2.5 points
Stocks are different from bonds because:
Question options:

stocks, unlike bonds, are major sources of funds.

stocks, unlike bonds, represent residual ownership.

stocks, unlike bonds, give owners legal claims to payments.

bonds, unlike stocks, represent voting ownership.
Question 38        2.5 / 2.5 points
Which of the statements below is FALSE?
Question options:

The profits for common stock owners come before payment to employees, suppliers, government, and creditors.

Shareholders elect the board of directors, which ultimately selects the management team that runs the day-to-day operations of the company.

Stock is a major financing source for public companies.

Common stock's ownership claim on the assets and cash flow of a company is often referred to as a residual claim.
Question 39        0 / 2.5 points
Which of the statements below is true?
Question options:

Buying of shares is the selling of ownership in the company.

A company is said to go &quot;private&quot; when it opens up its ownership structure to the general public through the sale of common stock.

Private companies choose to sell stock to attract permanent financing through equity ownership of the company.

Most companies have the resident expertise to complete an initial public offering (IPO), or first public equity issue.
Question 40        2.5 / 2.5 points
Which of the statements below is FALSE?
Question options:

If an investor purchases 20% of the initial issue of the company, the investor then owns 20% of the company, given the one vote/one share norm.

After an initial offering, the company can sell more shares to the public at a later date. If the investor who originally purchased 20% does not purchase 20% of the subsequent issue, his or her ownership is diluted below 20%.

A preemptive right enables one to maintain one's proportional level of ownership.

A preemptive right is never particularly valuable to shareholders with large ownership percentages.

BU340 Lesson 4 & 5 Exam SCORE 95 PERCENT

Question 1        2.5 / 2.5 points
You have saved $47,000 for college and wish to use $15,000 per year. If you use the money as an ordinary annuity and earn 6.15% on your investment, how many years will your annuity last? Use a calculator to determine your answer.
Question options:

4.27 years

3.13 years

3.59 years

3.36 years
Question 2        2.5 / 2.5 points
An annuity is a series of:
Question options:

variable cash payments at regular intervals across time.

equal cash payments at regular intervals across time.

variable cash payments at different intervals across time.

equal cash payments at different intervals across time.
Question 3        2.5 / 2.5 points
If you borrow $100,000 at an annual rate of 8% for a 10-year period and repay the total amount of principal and interest due of $215,892.50 at the end of 10 years, what type of loan did you have?
Question options:

Amortized loan

Interest-only loan

Discount loan

Compound loan
Question 4        2.5 / 2.5 points
The main variables of the TVM equation are:
Question options:

present value, future value, time, interest rate, and payment.

present value, future value, perpetuity, interest rate, and payment.

present value, future value, time, annuity, and interest rate.

present value, future value, perpetuity, interest rate, and principal.
Question 5        2.5 / 2.5 points
You just won the Publisher's Clearing House Sweepstakes and the right to 20 after-tax ordinary annuity cash flows of $163,291.18. Assuming a discount rate of 7.50%, what is the present value of your lottery winnings? Use a calculator to determine your answer.
Question options:

$3,265,823.60

$1,789,520.81

$1,664,670.52

There is not enough information to answer this question.
Question 6        2.5 / 2.5 points
You have just won the Reader's Digest lottery of $5,000 per year for 20 years, with the first payment today followed by 19 more start-of-the-year cash flows. At an interest rate of 5%, what is the present value of your winnings?
Question options:

$100,000

$65,426.60

$62,311.05

$47,641.18
Question 7        2.5 / 2.5 points
What is the future value in Year 12 of an ordinary annuity cash flow of $6,000 per year at an interest rate of 4% per year?
Question options:

$90,154.83

$93,761.02

$28,675.97

$32,117.08
Question 8        2.5 / 2.5 points
What is the present value of a stream of annual end-of-the-year annuity cash flows if the discount rate is 0%, and the cash flows of $50 last for 20 years?
Question options:

Less than $1,000

Exactly $1,000

More than $1,000

This question cannot be answered because we have an interest rate of 0%.
Question 9        2.5 / 2.5 points
Which is greater, the present value of a $1,000 five-year ordinary annuity discounted at 10%, or the present value of a $1,000 five-year annuity due discounted at 10%?
Question options:

The ordinary annuity is worth more with a present value of $3,790.79.

The annuity due is worth more with a present value of $4,169.87.

The ordinary annuity is worth more with a present value of $4,169.87.

The annuity due is worth more with a present value of $4,586.85.
Question 10        2.5 / 2.5 points
What is the future value in Year 25 of an ordinary annuity cash flow of $2,000 per year at an interest rate of 10% per year?
Question options:

$66,505.81

$55,000.00

$196,694.12

$216,363.53
Question 11        2.5 / 2.5 points
Given the following cash flows, what is the future value at Year 6 when compounded at an interest rate of 8%?
Year    0    2    4    6
Cash Flow    $5,000    $7,000    $9,000    $11,000
Question options:

$38,955.39

$56,687.43

$42,074.42

$32,000
Question 12        2.5 / 2.5 points
If you borrow $100,000 at an annual rate of 8% for a 10-year period and repay with 10 equal annual end-of-the-year payments of $14,902.95, then you have just repaid what type of loan?
Question options:

Amortized loan

Interest-only loan

Discount loan

Compound loan
Question 13        2.5 / 2.5 points
Randy W. recently won the Western States Lottery of $6,500,000. The lottery pays either a total of twenty $325,000 payments per year with the first payment today (i.e., an annuity due), or $3,500,000 today. At what interest rate would Randy be financially indifferent between these two payout choices?
Question options:

5.37%

7.36%

7.76%

8.00%
Question 14        2.5 / 2.5 points
What type of loan makes interest payments throughout the life of the loan and then pays the principal and final interest payment at the maturity date?
Question options:

Amortized loan

Interest-only loan

Discount loan

Compound loan
Question 15        0 / 2.5 points
If you borrow $50,000 at an annual interest rate of 12% for six years, what is the annual payment (prior to maturity) on an interest-only type of loan?
Question options:

$0

$6,000

$8,333.33

$12,161.29
Question 16        2.5 / 2.5 points
If for the next 40 years you place $3,000 in equal year-end deposits into an account earning 8% per year, how much money will be in the account at the end of that time period?
Question options:

$120,000.00

$777,169.56

$839,343.12

$2,606,942.58
Question 17        2.5 / 2.5 points
If you borrow $100,000 at an annual rate of 8% for a 10-year period and repay the interest of $8,000 at the end of each year prior to maturity and the final payment of $108,000 at the end of 10 years, then you have just repaid what type of loan?
Question options:

Amortized loan

Interest-only loan

Discount loan

Compound loan
Question 18        0 / 2.5 points
Your firm intends to finance the purchase of a new construction crane. The cost is $1,500,000. How large is the payment at the end of Year 10 if the crane is financed at a rate of 8.50% as a discount loan?
Question options:

$228,611.56

$127,500

$3,391,475.16

There is not enough information to answer this question.
Question 19        2.5 / 2.5 points
Present value calculations do which of the following?
Question options:

Compound all future cash flows into the future

Compound all future cash flows back to the present

Discount all future cash flows back to the present

Discount all future cash flows into the future
Question 20        2.5 / 2.5 points
A/An __________ is a series of cash flows at regular intervals across time.
Question options:

annuity

annuity due

perpetuity due

None of the above
Online Exam 5
Question 21        2.5 / 2.5 points
Assume that Don is 45 years old and has 20 years for saving until he retires. He expects an APR of 8.5% on his investments. How much does he need to save if he puts money away annually in equal end-of-the-year amounts to achieve a future value of $1 million in 20 years' time?
Question options:

$20,570.00

$20,670.97

$20,770.90

$20,800.00
Question 22        2.5 / 2.5 points
The phrase "price to rent money" is sometimes used to refer to:
Question options:

historical prices.

compound rates.

discount rates.

interest rates.
Question 23        2.5 / 2.5 points
Suppose you invest $1,000 today, compounded quarterly, with the annual interest rate of 5%. What is your investment worth in one year?
Question options:

$1,025.00

$1,500.95

$1,025.27

$1,050.95
Question 24        2.5 / 2.5 points
James is a rational investor wishing to maximize his return over a 20-year period. The current yield curve is inverted with one-year rates at 5% and 20-year rates at 3.5%. James will invest in the lower-rate 20-year bonds if:
Question options:

he thinks rates will fall in the future and locking in long-term rates today may provide the highest long-run average return.

he thinks rates will rise in the future and locking in long-term rates today may provide the lowest long-run average return.

he thinks rates will remain flat at 5% in the future and locking in long-term rates today will prevent him from appearing greedy to those without this investment opportunity.

James has no idea what to do and should just skip this question.
Question 25        2.5 / 2.5 points
Suppose you deposit money in a certificate of deposit (CD) at a bank. Which of the following statements is true?
Question options:

The bank is borrowing money from you without a promise to repay that money with interest.

The bank is lending money to you with a promise to repay that money with interest.

The bank is technically renting money from you with a promise to repay that money with interest.

The bank is lending money to you, but not borrowing money from you.
Question 26        2.5 / 2.5 points
Assume you just bought a new home and now have a mortgage on the home. The amount of the principal is $150,000, the loan is at 5% APR, and the monthly payments are spread out over 30 years. What is the loan payment? Use a calculator to determine your answer.
Question options:

$798.95

$805.23

$850.32

$903.47
Question 27        2.5 / 2.5 points
The two major components of the interest rate that cause rates to vary across different investment opportunities or loans are:
Question options:

the default premium and the bankruptcy premium.

the liquidity premium and the maturity premium.

the default premium and the maturity premium.

the inflation premium and the maturity premium.
Question 28        2.5 / 2.5 points
You put down 20% on a home with a purchase price of $300,000. The down payment is thus $60,000, leaving a balance owed of $240,000. The bank will loan you the remaining balance at 4.28% APR. You will make annual payments with a 20-year payment schedule. What is the annual annuity payment under this schedule?
Question options:

$18,100.23

$22,625.29

$12,000.00

$33,785.23
Question 29        2.5 / 2.5 points
Nominal interest rates are the sum of two major components. These components are:
Question options:

the real interest rate and expected inflation.

the risk-free rate and expected inflation.

the real interest rate and default premium.

the real interest rate and the T-bill rate.
Question 30        2.5 / 2.5 points
When interest rates are stated or given for loan repayments, it is assumed that they are __________ unless specifically stated otherwise.
Question options:

daily rates

annual percentage rates

effective annual rates

APYs
Question 31        2.5 / 2.5 points
The __________ compensates the investor for the additional risk that the loan will not be repaid in full.
Question options:

default premium

inflation premium

real rate

interest rate
Question 32        2.5 / 2.5 points
If you take out a loan from a bank, you will be charged:
Question options:

for principal but not interest.

for interest but not principal.

for both principal and interest.

for interest only.
Question 33        2.5 / 2.5 points
Which of the following statements is true if you increase your monthly payment above the required loan payment?
Question options:

The extra portion of the payment does not go to the principal.

You can significantly increase the number of payments needed to pay off the loan.

The extra portion of the payment increases the principal.

You can significantly reduce the number of payments needed to pay off the loan.
Question 34        2.5 / 2.5 points
We can write the true relationship between the nominal interest rate and the real rate and expected inflation as which of the following?
Question options:

(1 + r) = (1 + r) × (1 + h*)

r = (1 + r*) × (1 + h) - 1

r* = (1 + r) × (1 + h) -1

r = (1 + r*) × (1 + h) + 1
Question 35        2.5 / 2.5 points
Assume that you are willing to postpone consumption today and buy a certificate of deposit (CD) at your local bank. Your reward for postponing consumption implies that at the end of the year:
Question options:

you will be able to consume fewer goods.

you will be able to buy the same amount of goods or services.

you will be able to buy fewer goods or services.

you will be able to buy more goods or services.
Question 36        2.5 / 2.5 points
The typical payments on a consumer loan are made at:
Question options:

the end of each day.

the end of each week.

the end of each month.

the beginning of each month.
Question 37        2.5 / 2.5 points
What is the EAR if the APR is 10.52% and compounding is daily?
Question options:

Slightly above 10.09%

Slightly below 11.09%

Slightly above 11.09%

Over 11.25%
Question 38        2.5 / 2.5 points
Suppose you invest $2,000 today, compounded monthly, with an annual interest rate of 7.5%. What is your investment worth in one year?
Question options:

$2,150

$2,152.81

$2,155.27

$2,154.77
Question 39        2.5 / 2.5 points
Suppose you postpone consumption so that by investing at 8% you will have an extra $800 to spend in one year. Suppose that inflation is 4% during this time. What is the approximate real increase in your purchasing power?
Question options:

$800

$600

$400

$200
Question 40        2.5 / 2.5 points
Which of the following statements is true?
Question options:

On many calculators the TVM key for interest is I/Y; this is Interest per Year, or the EAR rate.

On many calculators the TVM key for interest is Y/I; this is Interest per Year, or the APR rate.

On many calculators the TVM key for interest is I/Y; this is Interest per Year, or the APR rate.

On many calculators the TVM key for a period is I/Y.

BU340 Lesson 3 Exam SCORE 95 PERCENT

Online Exam 3
Question 1        5 / 5 points
Which of the following will result in a future value greater than $100?
Question options:

PV = $50, r = an annual interest rate of 10%, and n = 8 years.

PV = $75, r = an annual interest rate of 12%, and n = 3 years.

PV = $90, r = an annual interest rate of 14%, and n = 1 year.

All of the future values are greater than $100.
Question 2        5 / 5 points
Your university is running a special offer on tuition. This year's tuition cost is $18,000. Next year's tuition cost is scheduled to be $19,080. The university offers to discount next year's tuition at a rate of 6% if you agree to pay both years' tuition in full today. How much is the total tuition bill today if you take the offer?
Question options:

$18,000

$34,981

$37,080

$36,000
Question 3        0 / 5 points
Which of the following formulas is correct for finding the present value
of an investment?
Question options:

<p><img border="0" id="MathMLEq1" src="https://study.ashworthcollege.edu/access/content/attachment/0ead80b7-a576-497a-bb9e-4c247c462da6/fckeditor/429e575b-0837-46b5-afb1-2057ddf903db/fmath-equation-40E4EDFD-A1CD-E9CF-8E58-AA18D025876A.png" /></p>

<p> PV = FV × (1 + r)ⁿ</p>

<p> PV = FVⁿ × (1 + r)</p>

<p><img border="0" id="MathMLEq2" src="https://study.ashworthcollege.edu/access/content/attachment/0ead80b7-a576-497a-bb9e-4c247c462da6/fckeditor/955492a1-a2af-4fad-914b-e11637fbcf20/fmath-equation-5EDD8CA8-9A04-BD7F-C0D8-D18344981CE1.png" /></p>
Question 4        5 / 5 points
Gasoline cost $.10 per gallon in 1930. Over the next 60 years, the price rose at an average rate of 4.42% per year. Based on this information, what was the average price of a gallon of gas in 1990?
Question options:

$1.34 per gallon

$1.53 per gallon

$2.65 per gallon

$2.75 per gallon
Question 5        5 / 5 points
You won the state lottery and took the payout as a $1,283,475 lump sum today. Your spouse has decided that you need to invest this money for the next 10 years and can expect it to earn an average annual rate of return of 7.18%. If this comes to pass, how much money will be in the account at the end of the period?
Question options:

$8,471,253

$2,567,586

$1,920,388

$1,890,471
Question 6        5 / 5 points
You could double your money in about 9 years if you could earn an annual rate of return of what? Use the Rule of 72 to determine your answer.
Question options:

You would need to earn an annual rate of return of about 12%.

You would need to earn an annual rate of return of about 10%.

You would need to earn an annual rate of return of about 8%.

There is not enough information to answer this question.
Question 7        5 / 5 points
A two-year investment of $200 is made today at an annual interest rate of 6%. Which of the following statements is true?
Question options:

The PV is $178.

The FV is $224.

The FV is $224.72.

This question is irrelevant because there are no two-year investments that earn an average of 6% per year.
Question 8        5 / 5 points
An investment promises a payoff of $195 two and one-half years from today. At a discount rate of 7.5% per year, what is the present value of this investment?
Question options:

$162.03

$162.75

$169.47

There is not enough information to answer this question.
Question 9        5 / 5 points
A two-year investment of $200 is made today at an annual interest rate of 6%. Which of the following statements is true?
Question options:

The future value would be greater if the interest rate was higher.

The present value would be greater if the interest rate was higher.

The future value would be greater if the interest rate was lower.

The future value does not change as the interest rate changes.
Question 10        5 / 5 points
Which of the following investments has a larger future value: Investment A—a $1,000 investment earning 5% per year for 6 years, or Investment B—a $500 investment earning 10% per year for 6 years, with a bonus of an extra $500 added at the end of the sixth year?
Question options:

Investment B, with a future value of $1,386.

Investment A, with a future value of $1,386.

Investment A, with a future value of $1,340.

The investments have equal value.
Question 11        5 / 5 points
Which of the following actions will increase the present value of an investment?
Question options:

Decrease the interest rate.

Decrease the future value.

Increase the amount of time.

All of the above will increase the present value.
Question 12        5 / 5 points
A $100 deposit today that earns an annual interest rate of 10% is worth how much at the end of two years? Assume all interest received at the end of the first year is reinvested the second year.
Question options:

$100

$120

$121

$122
Question 13        5 / 5 points
In 1970, before the era of major league baseball free agency, the minimum player salary was $12,000. In 1975, the minimum salary was $16,000. What was the average annual growth in the minimum salary in major league baseball over those five years?
Question options:

13.40%

2.67%

5.92%

15%
Question 14        5 / 5 points
Which of the following is the correct formula for calculating the future value?
Question options:

<p><img border="0" id="MathMLEq2" src="https://study.ashworthcollege.edu/access/content/attachment/0ead80b7-a576-497a-bb9e-4c247c462da6/fckeditor/584b2c4e-ea3e-4acd-9ca4-29fcc4df4a20/fmath-equation-AD7D39AD-5CB0-C75B-E35C-1111743F5579.png" /></p>

<p> FV = PV × (1 + r)ⁿ</p>

<p> PV = FV × (1 + r)ⁿ</p>

<p><img border="0" id="MathMLEq3" src="https://study.ashworthcollege.edu/access/content/attachment/0ead80b7-a576-497a-bb9e-4c247c462da6/fckeditor/14fd8705-cb6b-4a3f-b2fc-97a1138b4b67/fmath-equation-8BEAAE42-2606-88E2-7B6E-010728C12464.png" /></p>
Question 15        5 / 5 points
In your first year out of college, you hope to earn $50,000 per year. How many years will you have to work until you earn $100,000 if your income increases at a rate of 10% per year? Use the Rule of 72 to determine your answer.
Question options:

You would need to work for just over 5 years to reach an income level of $100,000 per year.

You would need to work for just over 6 years to reach an income level of $100,000 per year.

You would need to work for just over 7 years to reach an income level of $100,000 per year.

You would need to work for just over 8 years to reach an income level of $100,000 per year.
Question 16        5 / 5 points
Rory has $2,500 but needs $5,000 to purchase a new golf cart. If he can invest his money at a rate of 12% per year, approximately how many years will it take the money in Rory's account to grow to $5,000? Use the Rule of 72 to determine your answer.
Note: The golf cart's price may have changed by the time Rory's account reaches a value of $5,000.
Question options:

2 years

4 years

6 years

8 years
Question 17        5 / 5 points
Which of the following investments has a larger future value? A $100 investment earning 10% per year for 5 years, or a $100 investment earning 5% per year for 10 years?
Question options:

An investment of $100 invested at 10% per year for 5 years because it has a future value of $161.05.

An investment of $100 invested at 10% per year for 5 years because it has a future value of $162.89.

An investment of $100 invested at 5% per year for 10 years because it has a future value of $161.05.

An investment of $100 invested at 5% per year for 10 years because it has a future value of $162.89.
Question 18        5 / 5 points
Your production manager informs you that currently the firm is producing 1,438 heating units per month but has plans to increase production at a rate of 5% per month until the firm is producing 3,000 units per month. How many months will this take?
Question options:

27.33 months

15.07 months

14 months

There is not enough information to answer this question.
Question 19        5 / 5 points
Your aunt places $13,000 into an account earning an interest rate of 7% per year. After 5 years the account will be valued at $18,233.17. Which of the following statements is correct?
Question options:

The present value is $13,000, the time period is 7 years, the present value is $18,233.17, and the interest rate is 5%.

The future value is $13,000, the time period is 5 years, the principal is $18,233.17, and the interest rate is 7%.

The principal is $13,000, the time period is 5 years, the future value is $18,233.17, and the interest rate is 7%.



The principal is $13,000, the time period is 7 years, the future value is $18,233.17, and the interest rate is 5%.
Question 20        5 / 5 points
__________ is simply the interest earned in subsequent periods on the interest earned in prior periods.
Question options:

Quoted interest

Anticipated interest

Simple interest

Compound interest

BU340 Lesson 1 Exam SCORE 100 PERCENT

Question 1        5 / 5 points
Which of the following is an advantage of a sole proprietorship?
Question options:

The owner's unlimited liability

The lack of continuity upon death of the owner

The ease of start-up

The ability to raise capital
Question 2        5 / 5 points
Stocks are bought and sold in __________ markets.
Question options:

equity

debt

derivatives

foreign exchange
Question 3        5 / 5 points
The common objective of borrowing and lending is to:
Question options:

make all parties better off.

gain a profit at the other's expense.

make a firm or individual appear more liquid than is really the case.

thwart regulatory authority.
Question 4        5 / 5 points
__________ are the forums where buyers and sellers of financial assets and commodities meet.
Question options:

Housing markets

Federal Reserve banks

Financial markets

Automotive shows
Question 5        5 / 5 points
Financial assets that will mature within a year are bought and sold in the __________ market.
Question options:

debt

capital

stock

money
Question 6        5 / 5 points
The set of financial activities that support the OPERATIONS of a business is best described by which main area of finance?
Question options:

Corporate finance

Investments

Financial institutions and markets

International finance
Question 7        5 / 5 points
At its most basic level, the function of financial intermediaries is to:
Question options:

track and report interest rates.

move money from lenders to borrowers and back again.

report all financial transactions to the federal government.

effect a transfer of wealth in society.
Question 8        5 / 5 points
__________ addresses the question of how to handle our day-to-day business needs.
Question options:

Capital budgeting

Capital structure

Working capital management

Accounts receivable management
Question 9        5 / 5 points
__________ is a major disadvantage of the corporate form of business.
Question options:

Double taxation

Unlimited liability

Lack of ability to raise capital

Transfer of ownership
Question 10        5 / 5 points
In agency theory, the owners of the business are referred to as __________, and the managers are referred to as __________.
Question options:

bondholders, principals

stockholders, bondholders

agents, principals

principals, agents
Question 11        5 / 5 points
Options are bought and sold in __________ markets.
Question options:

equity

debt

derivatives

foreign exchange
Question 12        5 / 5 points
Of the following, which is NOT one of the four main areas of finance?
Question options:

International Finance

Corporate Finance

Investments

All are considered main areas of finance.
Question 13        5 / 5 points
The problem of motivating one party to act in the best interest of another party is known as the:
Question options:

leadership directive.

management priority.

principal-agent problem.

sigma six structure.
Question 14        5 / 5 points
The means by which a company is financed refers to the firm's ________.
Question options:

capital budgeting

capital structure

accounts receivable management

working capital management
Question 15        5 / 5 points
Currencies are bought and sold in __________ markets.
Question options:

equity

debt

derivatives

foreign exchange
Question 16        5 / 5 points
__________ addresses the question of what business we should be in over the long run.
Question options:

Capital budgeting

Capital structure

Working capital management

Accounts receivable management
Question 17        5 / 5 points
The sale of "new" securities, where the financial asset is being traded for the very first time, is said to take place in the __________ market.
Question options:

primary

money

secondary

capital
Question 18        5 / 5 points
__________ is the area of finance concerned with activities like borrowing funds to finance projects such as plant expansions or new product launches.
Question options:

Working capital management

International finance

Investments

Corporate finance
Question 19        5 / 5 points
A __________ is a business that is owned entirely by an individual.
Question options:

sole proprietorship

partnership

subchapter S corporation

corporation
Question 20        5 / 5 points
__________ is the area of finance concerned with the activities of buying and selling financial assets such as stocks and bonds.
Question options:

Investments

Corporate finance

International finance

Financial markets and institutions

BU330 Online Exam 2_03 SCORE 100 PERCENT

Question 1 of 20
5.0 Points
Watson's Computer Company uses ABC to account for its manufacturing process.

Activities    Indirect activity budget    Allocation base (cost driver)
Materials handling     $52,000    Based on number of parts
Machine setup    30,000    Based on number of setups
Assembling    9,750    Based on number of parts
Packaging    15,300    Based on number of finished units

Watson's Computer Company expects to produce 2,250 computers. Watson's Computer Company also expects to use 13,000 parts and have 20 setups. The allocation rate for materials handling will be:



A.  $4.
B.  $6.80.
C.  $23.11.
D.  $7.01.

Question 2 of 205.0 Points
Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?
  A.  Internal failure costs
  B.  Backflush costing
  C.  Just-in-time
  D.  External failure costs

Question 3 of 205.0 Points
The entry to record the purchase of raw materials on account using a job costing system would include a:
A.  credit to work-in-process inventory.
B.  debit to accounts payable.
C.  debit to work-in-process inventory.
D.  debit to raw materials inventory.

Question 4 of 205.0 Points
If jobs have been under costed due to under allocation of manufacturing overhead, then cost of goods sold (COGS) is too low and which of the following corrections must be made?
  A.  Decrease COGS for the amount of the under allocation
  B.  Increase COGS for double the amount of the under allocation
  C.  Decrease COGS for double the amount of the under allocation
  D.  Increase COGS for the amount of the under allocation

Question 5 of 205.0 Points
Which of the following is a lean strategy?
  A.  Group like machines together.
  B.  Produce in smaller batches than a traditional system.
  C.  Maintain a higher level of inventory than a traditional system.
  D.  Lengthen setup times relative to a traditional system.

Question 6 of 205.0 Points
In job costing, the journal entry to record the use of direct materials on jobs is to debit work-in-process inventory and credit:
A.  raw materials inventory.
B.  finished goods inventory.
C.  manufacturing overhead.
D.  wages payable.

Question 7 of 205.0 Points
The predetermined indirect cost allocation rate is computed as:
A.  total estimated indirect costs / total estimated amount of the allocation base.
B.  total amount of the allocation base / total estimated indirect costs.
C.  total estimated indirect costs + total estimated amount of the allocation base.
D.  total amount of the allocation base - total estimated indirect costs.

Question 8 of 205.0 Points
The cost of downtime caused by quality problems with the raw materials would be classified as what type of cost?
  A.  Prevention cost
  B.  Appraisal cost
  C.  External failure cost
  D.  Internal failure cost

Question 9 of 205.0 Points
Which of these documents informs the storeroom to send specific materials to the factory floor?
  A.  Receiving report
  B.  Bill of materials
  C.  Purchase order
  D.  Materials requisition

Question 10 of 205.0 Points
A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is:
A.  appraisal costs.
B.  value engineering.
C.  activity-based costing.
D.  prevention costs.

Question 11 of 205.0 Points
Service firms develop a predetermined rate for some costs. This rate is called the:
A.  labor rate.
B.  direct cost rate.
C.  indirect cost allocation rate.
D.  hourly cost rate.


Question 12 of 20
5.0 Points
Kramer Company manufactures coffee tables and uses an activity-based costing system to allocate all manufacturing conversion costs. Each coffee table consists of 20 separate parts totaling $240 in direct materials, and each requires 5 hours of machine time to produce. Additional information follows.

Activity    Allocation Base    Cost Allocation Rate
Materials handling    Number of parts    $2.00 per part
Machining    Machine hours    $2.75 per machine hour
Assembling    Number of parts    $1.00 per part
Packaging    Number of finished units    $3.00 per finished unit

What is the cost of machining per coffee table?
A.  $15
B.  $21
C.  $13.75
D.  $55

Question 13 of 205.0 Points
The benefits of using the ABC costing system are higher if the company:
A.  has high indirect costs.
B.  produces many different products that use differing amounts of resources.
C.  has high indirect costs and produces many different products that use differing amounts of resources.
D.  produces only one product.

Question 14 of 205.0 Points
The first step in developing an ABC system is:
A.  calculate an activity cost allocation rate for each activity.
B.  allocate the costs to the cost object using the activity cost allocation rates.
C.  select an allocation base for each activity.
D.  identify the primary activities and estimate a total cost pool for each.

Question 15 of 205.0 Points
Showboat Corporation had actual manufacturing overhead costs for the most recent year of $29,500. Manufacturing overhead is allocated using a predetermined manufacturing overhead rate of $1.50 per direct labor hour. Direct labor cost is $19 per hour. At the end of the year, Cabaret Corporation found it had over allocated manufacturing overhead by $1,250. How much manufacturing overhead was allocated in total during the year?
A.  $28,250
B.  $29,500
C.  $30,750
D.  $1,250

Question 16 of 205.0 Points
Venus Crates manufactures custom crates for a variety of uses. The following data have been recorded for Job 551, which was recently completed. Direct materials used cost $7,200. There were 82 machine hours used on this job. The predetermined overhead rate is $30 per machine hour used. There were 175 direct labor hours worked on this job at a direct labor wage rate of $24 per hour. What is the total manufacturing cost of Job 551?
A.  $13,860
B.  $4,200
C.  $2,460
D.  $7,457

Question 17 of 205.0 Points
A(n) ________ is an estimated manufacturing overhead rate computed before the year begins.
A.  cost allocation
B.  cost driver
C.  predetermined manufacturing overhead rate
D.  actual manufacturing overhead rate

Question 18 of 205.0 Points
Which of the following is a result of cost distortion?
  A.  Over costing of all products
  B.  Under costing of all products
  C.  Accurate costing of all products
  D.  Over costing of some products and under costing of other products

Question 19 of 20
5.0 Points
Here are selected data for Sunny Sky Corporation.
 
Beginning raw materials inventory    $37,000    Beginning work-in-process inventory    $62,200
Beginning finished goods inventory    58,300    Cost of materials purchased    151,000
Cost of direct materials requisitioned    91,300    Direct labor incurred    135,000
Actual manufacturing overhead    160,000    Cost of goods manufactured    287,000
Cost of goods sold    265,000    Manufacturing overhead rate (% of direct labor)    125%


What is the ending work-in-process inventory balance?
A.  $161,500
B.  $170,250
C.  $211,200
D.  $229,950

Question 20 of 205.0 Points
Which term listed below describes costs incurred when the company fails to detect poor quality goods or services before delivery to the customer?
  A.  Internal failure costs
  B.  Value-added activity
  C.  External failure costs
  D.  Just-in-time production

BMGT495 Week 4 Project 1 External Environmental Analysis

Company: Skyworks Solutions, Inc. (NMS: SWKS)

Company Overview

Skyworks Solutions Inc is headquartered in Woburn, Massachusetts. Skyworks was incorporated in Delaware on Sept. 10, 1962 as Alpha Industries, Inc, and merged with the wireless communications division of Conexant in 2002, and adopted present name. Skyworks Solutions is a global company that provides analog semiconductors that connect people, places, and things in aerospace, automotive, broadband, cellular infrastructure, military, smartphones and in a number of other areas. Skyworks has sales and service facilities throughout Asia, Europe, and North America. Company employs 9,400 employees across the world. Company sells more than 5 billion units to customers every year. Skyworks has been pioneer in developing new technologies, and possesses several patents. Skyworks products are used in telemedicine, connected home, and many other areas. Major customers of Skyworks include Ciso, Honeywell, Fujitsu, GE, Nest, LG, Google, Ericsson, and Sensus. Skyworks products are at the heart of anything connecting people and things. Sky5, a unifying platform of Skyworks, is empowering revolutionary 5G applications (Skyworks Corporate Website, 2019). Over the years, Skyworks acquired several companies such as Microwave Device Dept. of Sylvania Electric Products, Inc, Optimax, Inc, Spectrum Microwave Corp, C.F.P. Holding Co., Inc, Central Microwave Co., and Avnera Corporation. Co. (Mergent Online, 2019). These acquisitions allowed Skyworks to expand product portfolio, and get access to intellectual property that help in improving competitiveness. In 2018, company turnover was $3.87 billion, and net income was $918 million. Earning per share of Skyworks in 2018 was $5.01 (Mergent Online, 2019).

 

Main competitors of Skyworks Solutions include IBM, Intel, Micron Technology, Raytheon, Broadcom, Applied Materials, Texas Instrument, Lam Research Corp, Analog Devices Inc, Harris Corp, ON Semiconductor Corp, and Microchip Technology Inc. David Aldrich is the Executive Chairman, and Liam Griffin is the President & CEO of Skyworks. Kris Senneseal is the Senior Vice President, and CFO of the company since 2016.