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Which choice showing the rate/compounding period has the highest effective annual interest rate?
1.10.1%/semi-annual
2.9.96%/quarterly
3.9.90/every two months
4.10%/monthly
5.9.95/twice monthly
$500 grew to $751.81 at a 6% annual rate. Exactly how long did that take?
1.4 years
2.5 years
3.6 years
4.7 years
5.8 years
You’d like to buy your favorite professor an ounce of gold for his birthday, which is exactly 6 months away. Spot gold costs $450/ounce and 6 month forward gold costs $470/ounce. How much do you save (in terms of future value) by making the better choice? i = 0.5% per month.
1.$5.13
2.$6.33
3.$8.83
4.$11.33
5.$13.83
A 15 year 5% coupon bond with a $1,000 face value has a yield to maturity of 3%. What’s the bond’s current yield?
1.5.43%
2.5.17%
3.5.00%
4.4.47%
5.4.04%
You will receive $55,000 in 3 years. i = 7%. What is the present value of this cash flow?
1.$43,959.24
2.$44,896.38
3.$45,720.03
4.$48,039.13
5.$49,039.13
A 16 year 5% coupon bond with a $1,000 face value has a yield to maturity of 3%. What’s the bonds price?
1.$1,181
2.$1,251
3.$1,326
4.$1,448
5.$1,481
Wysiwig, Inc. is expected to pay a dividend of £2.20 next year. The dividend is then expected to grow at 4.5% per year. Its stock trades at £33.00. According to Gordon’s model what is its cost of equity capital?
1.11.17%
2.11.46%
3.11.70%
4.12.21%
5.12.43%
You will combine stock A and stock B into a portfolio with half the money in each stock. Then you will combine the resulting portfolio 50-50 with a risk free bond. A has an expected return of 8% and a standard deviation of 20%. B has an expected return of 12% and a standard deviation of 28%. The correlation coefficient between A and B is 0.25. The risk free bond has an expected return of 2%. What is the expected return of the final portfolio?
1.6.00%
2.6.25%
3.6.50%
4.6.75%
5.7.00%
What’s the present value of a perpetuity of €2,222? i=5%.
1.€40,000
2.€44,000
3.€44,400
4.€44,440
5.€44,444
What is the yield-to-maturity of a 10 year, 8% coupon bond if its price is $875.38?
1.6.09%
2.9.40%
3.9.82%
4.10.03%
5.10.49%
 
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