Question 1

You purchase a two year annuity for $2800. The annuity pays $1500 each year. What is the annuity's approximate IRR?

Question 1 options:

8.6%

10%

4.5%

2.3%

Save

Question 2

You can purchase two three-year annuities today. One is valued at $2000, the other at $4000. The 1st annuity begins paying $1000 in a year. The 2nd annuity begins paying $1500 in two years. The interest rate is 5%. What is the PV of the portfolio? (Assume anything not paid during the 3 years will be paid to you at the end of the 3 years.)

Question 2 options:

$6613.60

$808.12

$5336.35

$6808.12

Save

Question 3

Of the following car financing options, which one would you prefer while assuming that you prefer paying the least amount of dollars and that you face a 10% annual compound interest rate on all your financial decisions?

Question 3 options:

A lump-sum payment of $19,000 today only.

A lump-sum payment of $20,000 today only.

A lump-sum payment of $20,000 in two years from today.

A payment $10,000 today and another of $10,000 in one year from today.

Save

Question 4

Which of the following could be an appropriate period used in a present value calculation?

Question 4 options:

Three months.

A month.

A year

All of these answers.

Save

Question 5

In a year, you expect to receive a payment of $1 million in a year. That annual interest rate is 5%. What is the present value of the future payment?

Question 5 options:

$666,667

$995,025

$1,050,000

$952,381

Save

Question 6

Assume you invest money in a bond that will pay you $250,000 in four years. The bond has an annual interest rate of 5%. You do not receive interest payments while you own the bond; it is zero-coupon. What is the bond's present value?

Question 6 options:

$240,385

$205,482

$238,095

$205,676

Save

What is the present value of $100,000 that will be received 5 years from today if you face a 10% compound interest rate every year (rounded up to the nearest dollar)?

Question 7 options:

62092

82092

72092

52092

Save

Which of the following is the definition of the Macaulay duration?

Question 8 options:

The weighted average time, measured in years, until cash flows are received.

The price sensitivity of a bond.

All of these answers.

The percentage change in price for a unit change in yield.

Save

Given an inflation rate of 3% and a real rate of 5%, what is the corresponding nominal rate?

Question 9 options:

108%

4%

9.2%

8%

Save

Question 10

A bond has a coupon rate of 7% and a yield to maturity rate of 8%. The bond is ____.

Question 10 options:

selling at a discount.

selling at yield

selling at a premium.

selling at par.

Save

Question 11

A bond grants its holder the option to sell the bond back to the issuer at a fixed price at a fixed date prior to the bond's maturity. When evaluating the bond's value, the company should calculate the bond's _____.

Question 11 options:

yield to discount.

yield to put.

yield to call.

yield to worst.

Save

Question 12

Which of the following statements regarding bonds and par values is true?

Question 12 options:

Corporate bonds usually have par values equal to $10,000.

A bond selling at par has a coupon rate so the bond is worth its redemption value at maturity.

All of these answers.

The par value of a bond never changes.

Save

Question 13

A zero-coupon bond has a face value of $1000 and a market value of $800. The bond will mature in 5 years. What is its yield to maturity?

Question 13 options:

205.17%

104.56%

4.56%

-4.37%

Save

Question 14

An annuity has an interest rate of 7% and makes a quarterly payment of $2000. The annuity is to last for 5 years. What is the present value of the annuity.

Question 14 options:

$33,505.76

$21,188.03

$2,118.80

$8,200.40

Save

Question 15

Which of the following influences a bond's price risk?

Question 15 options:

Mutual funds, pension managers and banks divest themselves of the issuing company's bonds.

The possibility that market interest rates will increase.

All of these answers.

The possibility the issuing company's credit rating will be decreased.

Question 1

You purchase a two year annuity for $2800. The annuity pays $1500 each year. What is the annuity's approximate IRR?

Question 1 options:

8.6%

10%

4.5%

2.3%

Save

Question 2

You can purchase two three-year annuities today. One is valued at $2000, the other at $4000. The 1st annuity begins paying $1000 in a year. The 2nd annuity begins paying $1500 in two years. The interest rate is 5%. What is the PV of the portfolio? (Assume anything not paid during the 3 years will be paid to you at the end of the 3 years.)

Question 2 options:

$6613.60

$808.12

$5336.35

$6808.12

Save

Question 3

Of the following car financing options, which one would you prefer while assuming that you prefer paying the least amount of dollars and that you face a 10% annual compound interest rate on all your financial decisions?

Question 3 options:

A lump-sum payment of $19,000 today only.

A lump-sum payment of $20,000 today only.

A lump-sum payment of $20,000 in two years from today.

A payment $10,000 today and another of $10,000 in one year from today.

Save

Question 4

Which of the following could be an appropriate period used in a present value calculation?

Question 4 options:

Three months.

A month.

A year

All of these answers.

Save

Question 5

In a year, you expect to receive a payment of $1 million in a year. That annual interest rate is 5%. What is the present value of the future payment?

Question 5 options:

$666,667

$995,025

$1,050,000

$952,381

Save

Question 6

Assume you invest money in a bond that will pay you $250,000 in four years. The bond has an annual interest rate of 5%. You do not receive interest payments while you own the bond; it is zero-coupon. What is the bond's present value?

Question 6 options:

$240,385

$205,482

$238,095

$205,676

Save

What is the present value of $100,000 that will be received 5 years from today if you face a 10% compound interest rate every year (rounded up to the nearest dollar)?

Question 7 options:

62092

82092

72092

52092

Save

Which of the following is the definition of the Macaulay duration?

Question 8 options:

The weighted average time, measured in years, until cash flows are received.

The price sensitivity of a bond.

All of these answers.

The percentage change in price for a unit change in yield.

Save

Given an inflation rate of 3% and a real rate of 5%, what is the corresponding nominal rate?

Question 9 options:

108%

4%

9.2%

8%

Save

Question 10

A bond has a coupon rate of 7% and a yield to maturity rate of 8%. The bond is ____.

Question 10 options:

selling at a discount.

selling at yield

selling at a premium.

selling at par.

Save

Question 11

A bond grants its holder the option to sell the bond back to the issuer at a fixed price at a fixed date prior to the bond's maturity. When evaluating the bond's value, the company should calculate the bond's _____.

Question 11 options:

yield to discount.

yield to put.

yield to call.

yield to worst.

Save

Question 12

Which of the following statements regarding bonds and par values is true?

Question 12 options:

Corporate bonds usually have par values equal to $10,000.

A bond selling at par has a coupon rate so the bond is worth its redemption value at maturity.

All of these answers.

The par value of a bond never changes.

Save

Question 13

A zero-coupon bond has a face value of $1000 and a market value of $800. The bond will mature in 5 years. What is its yield to maturity?

Question 13 options:

205.17%

104.56%

4.56%

-4.37%

Save

Question 14

An annuity has an interest rate of 7% and makes a quarterly payment of $2000. The annuity is to last for 5 years. What is the present value of the annuity.

Question 14 options:

$33,505.76

$21,188.03

$2,118.80

$8,200.40

Save

Question 15

Which of the following influences a bond's price risk?

Question 15 options:

Mutual funds, pension managers and banks divest themselves of the issuing company's bonds.

The possibility that market interest rates will increase.

All of these answers.

The possibility the issuing company's credit rating will be decreased.

Question 1

You purchase a two year annuity for $2800. The annuity pays $1500 each year. What is the annuity's approximate IRR?

Question 1 options:

8.6%

10%

4.5%

2.3%

Save

Question 2

You can purchase two three-year annuities today. One is valued at $2000, the other at $4000. The 1st annuity begins paying $1000 in a year. The 2nd annuity begins paying $1500 in two years. The interest rate is 5%. What is the PV of the portfolio? (Assume anything not paid during the 3 years will be paid to you at the end of the 3 years.)

Question 2 options:

$6613.60

$808.12

$5336.35

$6808.12

Save

Question 3

Of the following car financing options, which one would you prefer while assuming that you prefer paying the least amount of dollars and that you face a 10% annual compound interest rate on all your financial decisions?

Question 3 options:

A lump-sum payment of $19,000 today only.

A lump-sum payment of $20,000 today only.

A lump-sum payment of $20,000 in two years from today.

A payment $10,000 today and another of $10,000 in one year from today.

Save

Question 4

Which of the following could be an appropriate period used in a present value calculation?

Question 4 options:

Three months.

A month.

A year

All of these answers.

Save

Question 5

In a year, you expect to receive a payment of $1 million in a year. That annual interest rate is 5%. What is the present value of the future payment?

Question 5 options:

$666,667

$995,025

$1,050,000

$952,381

Save

Question 6

Assume you invest money in a bond that will pay you $250,000 in four years. The bond has an annual interest rate of 5%. You do not receive interest payments while you own the bond; it is zero-coupon. What is the bond's present value?

Question 6 options:

$240,385

$205,482

$238,095

$205,676

Save

What is the present value of $100,000 that will be received 5 years from today if you face a 10% compound interest rate every year (rounded up to the nearest dollar)?

Question 7 options:

62092

82092

72092

52092

Save

Which of the following is the definition of the Macaulay duration?

Question 8 options:

The weighted average time, measured in years, until cash flows are received.

The price sensitivity of a bond.

All of these answers.

The percentage change in price for a unit change in yield.

Save

Given an inflation rate of 3% and a real rate of 5%, what is the corresponding nominal rate?

Question 9 options:

108%

4%

9.2%

8%

Save

Question 10

A bond has a coupon rate of 7% and a yield to maturity rate of 8%. The bond is ____.

Question 10 options:

selling at a discount.

selling at yield

selling at a premium.

selling at par.

Save

Question 11

A bond grants its holder the option to sell the bond back to the issuer at a fixed price at a fixed date prior to the bond's maturity. When evaluating the bond's value, the company should calculate the bond's _____.

Question 11 options:

yield to discount.

yield to put.

yield to call.

yield to worst.

Save

Question 12

Which of the following statements regarding bonds and par values is true?

Question 12 options:

Corporate bonds usually have par values equal to $10,000.

A bond selling at par has a coupon rate so the bond is worth its redemption value at maturity.

All of these answers.

The par value of a bond never changes.

Save

Question 13

A zero-coupon bond has a face value of $1000 and a market value of $800. The bond will mature in 5 years. What is its yield to maturity?

Question 13 options:

205.17%

104.56%

4.56%

-4.37%

Save

Question 14

An annuity has an interest rate of 7% and makes a quarterly payment of $2000. The annuity is to last for 5 years. What is the present value of the annuity.

Question 14 options:

$33,505.76

$21,188.03

$2,118.80

$8,200.40

Save

Question 15

Which of the following influences a bond's price risk?

Question 15 options:

Mutual funds, pension managers and banks divest themselves of the issuing company's bonds.

The possibility that market interest rates will increase.

All of these answers.

The possibility the issuing company's credit rating will be decreased.

Question 1

Question 1

Question 1 options:

Question 1 options:

8.6%

8.6%

10%

10%

4.5%

4.5%

2.3%

2.3%

Save

Save

Question 2

Question 2

Question 2 options:

Question 2 options:

$6613.60

$6613.60

$808.12

$808.12

$5336.35

$5336.35

$6808.12

$6808.12

Save

Save

Question 3

Question 3

Question 3 options:

Question 3 options:

A lump-sum payment of $19,000 today only.

A lump-sum payment of $19,000 today only.

A lump-sum payment of $20,000 today only.

A lump-sum payment of $20,000 today only.

A lump-sum payment of $20,000 in two years from today.

A lump-sum payment of $20,000 in two years from today.

A payment $10,000 today and another of $10,000 in one year from today.

A payment $10,000 today and another of $10,000 in one year from today.

Save

Save

Question 4

Question 4

Which of the following could be an appropriate period used in a present value calculation?

Which of the following could be an appropriate period used in a present value calculation?

Question 4 options:

Question 4 options:

Three months.

Three months.

A month.

A month.

A year

A year

All of these answers.

All of these answers.

Save

Save

Question 5

Question 5

Question 5 options:

Question 5 options:

$666,667

$666,667

$995,025

$995,025

$1,050,000

$1,050,000

$952,381

$952,381

Save

Save

Question 6

Question 6

Question 6 options:

Question 6 options:

$240,385

$240,385

$205,482

$205,482

$238,095

$238,095

$205,676

$205,676

Save

Save

Question 7 options:

Question 7 options:

62092

62092

82092

82092

72092

72092

52092

52092

Save

Save

Which of the following is the definition of the Macaulay duration?

Which of the following is the definition of the Macaulay duration?

Question 8 options:

Question 8 options:

The weighted average time, measured in years, until cash flows are received.

The weighted average time, measured in years, until cash flows are received.

The price sensitivity of a bond.

The price sensitivity of a bond.

All of these answers.

All of these answers.

The percentage change in price for a unit change in yield.

The percentage change in price for a unit change in yield.

Save

Save

Given an inflation rate of 3% and a real rate of 5%, what is the corresponding nominal rate?

Given an inflation rate of 3% and a real rate of 5%, what is the corresponding nominal rate?

Question 9 options:

Question 9 options:

108%

108%

4%

4%

9.2%

9.2%

8%

8%

Save

Save

Question 10

Question 10

A bond has a coupon rate of 7% and a yield to maturity rate of 8%. The bond is ____.

A bond has a coupon rate of 7% and a yield to maturity rate of 8%. The bond is ____.

Question 10 options:

Question 10 options:

selling at a discount.

selling at a discount.

selling at yield

selling at yield

selling at a premium.

selling at a premium.

selling at par.

selling at par.

Save

Save

Question 11

Question 11

Question 11 options:

Question 11 options:

yield to discount.

yield to discount.

yield to put.

yield to put.

yield to call.

yield to call.

yield to worst.

yield to worst.

Save

Save

Question 12

Question 12

Which of the following statements regarding bonds and par values is true?

Which of the following statements regarding bonds and par values is true?

Question 12 options:

Question 12 options:

Corporate bonds usually have par values equal to $10,000.

Corporate bonds usually have par values equal to $10,000.

A bond selling at par has a coupon rate so the bond is worth its redemption value at maturity.

A bond selling at par has a coupon rate so the bond is worth its redemption value at maturity.

All of these answers.

All of these answers.

The par value of a bond never changes.

The par value of a bond never changes.

Save

Save

Question 13

Question 13

Question 13 options:

Question 13 options:

205.17%

205.17%

104.56%

104.56%

4.56%

4.56%

-4.37%

-4.37%

Save

Save

Question 14

Question 14

Question 14 options:

Question 14 options:

$33,505.76

$33,505.76

$21,188.03

$21,188.03

$2,118.80

$2,118.80

$8,200.40

$8,200.40

Save

Save

Question 15

Question 15

Which of the following influences a bond's price risk?

Which of the following influences a bond's price risk?

Question 15 options:

Question 15 options:

Mutual funds, pension managers and banks divest themselves of the issuing company's bonds.

Mutual funds, pension managers and banks divest themselves of the issuing company's bonds.

The possibility that market interest rates will increase.

The possibility that market interest rates will increase.

All of these answers.

All of these answers.

The possibility the issuing company's credit rating will be decreased.

The possibility the issuing company's credit rating will be decreased.