Write a 1,150- to 1,400-word paper in which you explain the importance of your selected business's vision, mission, and values in determining your strategic direction. Please do not write about an existing business. Create a new business and include the following: My new business I discussed is a Caribbean Restaurant in Orlando, FL
•Define your business, products or services, and customers by developing a mission statement. Ensure that you are differentiating your product or service.
•Create a vision for this organization that clearly demonstrates your decision on what you want your business to become in the future.
•Define your guiding principles or values for your selected business considering the topics of culture, social responsibility, and ethics.
•Analyze how the vision, mission, and values guide the organization's strategic direction.
•Evaluate how the organization addresses customer needs and critique how they achieve competitive advantage.
Wednesday, April 29, 2020
BUS 475 - Startegic Plan Part-I Conceptualize business
Tuesday, April 28, 2020
BUi530 Week 6 Discussion 9
Staff members who work at a women's medical clinic are required to provide clients with information about various community resources available to them on a variety of medical conditions. Some of the resources include information regarding abortions. One staff member claims that her religious beliefs do not permit her to provide information about abortions, which is against her religion. The director of the clinic claims it would cause an undue hardship to accommodate her religious beliefs.
- What are your thoughts?
BU350 Your Name M03 Assignment 05 Journal Article Review
M03 – Organizational Behavior
Journal Article Review
Journal Article
For this assignment, you will select an article from the Journal of Organizational Behavior. You can find this journal through the Ashworth Library in ProQuest. The link is located in the Course Introduction on the Library page.
You will write a 500-750 word review of the article. Your article needs to discuss or investigate one or more aspects of organizational behavior as it relates to your Final Project topic; it does not need to be comprehensive. The article should be one written within the last decade, unless you have prior approval from your professor.
In your article review, complete the following tasks.
- At the top of the page, cite the article's source using APA style.
- Then, answer these four questions, in one paragraph each:
- What did you learn?
- What surprised you?
- What do you want to learn more about?
- How might you apply what you learned to your Final Project in this course?
Note: If you cannot find a relevant article in Journal of Organizational Behavior, these other journals are also acceptable. Before selecting an alternative journal, please contact your instructor for approval.
- Organizational Behavior and Human Decision Processes
- Journal of Occupational and Organizational Psychology
- Journal of Leadership and Organizational Studies
- Organizational Psychology Review
Download the template provided for you. Save your work using the file name provided just adding your name in place of "your name"
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%
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>Div<sub>0</sub> 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 "private" 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.
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>Div<sub>0</sub> 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 "private" 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.
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.
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