FIN 534 Midterm Exam 1
FIN 534 Midterm Exam 1
1. Of the following investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero.
2. You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would increase the calculated value of the investment?
3. Which of the following statements regarding a 20-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?
4. Which of the following statements is CORRECT, assuming positive interest rates and holding other things constant?
5. You are considering two equally risky annuities, each of which pays $25,000 per year for 10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT?
6. Ellen now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?
7. Which of the following statements is CORRECT?
8. Bond A has a 9% annual coupon while Bond B has a 6% annual coupon. Both bonds have a 7% yield to maturity, and the YTM is expected to remain constant. Which of the following statements is CORRECT?
9. Which of the following statements is CORRECT?
10. Bonds A and B are 15-year, $1,000 face value bonds. Bond A has a 7% annual coupon, while Bond B has a 9% annual coupon. Both bonds have a yield to maturity of 8%, which is expected to remain constant for the next 15 years. Which of the following statements is CORRECT?
11. A Treasury bond has an 8% annual coupon and a 7.5% yield to maturity. Which of the following statements is CORRECT?
12. Which of the following statements is CORRECT?
13. Which of the following statements is NOT CORRECT?
14. How would the Security Market Line be affected, other things held constant, if the expected inflation rate decreases and investors also become more risk averse?
15. Which of
1. Of the following investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero.
2. You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would increase the calculated value of the investment?
3. Which of the following statements regarding a 20-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?
4. Which of the following statements is CORRECT, assuming positive interest rates and holding other things constant?
5. You are considering two equally risky annuities, each of which pays $25,000 per year for 10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT?
6. Ellen now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?
7. Which of the following statements is CORRECT?
8. Bond A has a 9% annual coupon while Bond B has a 6% annual coupon. Both bonds have a 7% yield to maturity, and the YTM is expected to remain constant. Which of the following statements is CORRECT?
9. Which of the following statements is CORRECT?
10. Bonds A and B are 15-year, $1,000 face value bonds. Bond A has a 7% annual coupon, while Bond B has a 9% annual coupon. Both bonds have a yield to maturity of 8%, which is expected to remain constant for the next 15 years. Which of the following statements is CORRECT?
11. A Treasury bond has an 8% annual coupon and a 7.5% yield to maturity. Which of the following statements is CORRECT?
12. Which of the following statements is CORRECT?
13. Which of the following statements is NOT CORRECT?
14. How would the Security Market Line be affected, other things held constant, if the expected inflation rate decreases and investors also become more risk averse?
15. Which of