This question has been answered by Expert on Jan 26, 2011. View Solution
RandyA5 posted a question
1-Suppose you borrowed \$12,000 at a rate of 9.0% and must repay it in four equal installments at the end of each of the next four years. How large would your payments be?
\$3,704.02
\$3,889.23
\$4,083.69
\$4,287.87
\$4,502.26

2-A 15-year bond with a face value of \$1,000 currently sells for \$850. Which of the following statements is CORRECT?
a-The bond’s coupon rate exceeds its current yield.
b-The bond’s current yield exceeds its yield to maturity.
c-The bond’s yield to maturity is greater than its coupon rate.
d-The bond’s current yield is equal to its coupon rate.
e-If the yield to maturity stays constant until the bond matures, the bond’s price will remain at \$850.

3-Ezzell Enterprises’ noncallable bonds currently sell for \$1,165. They have a 15-year maturity, an annual coupon of \$95, and a par value of \$1,000. What is their yield to maturity?
6.20%
6.53%
6.87%
7.24%
7.62%

4-year Treasury bonds yield 5.5%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on five-year bonds is 0.4%. What is the real risk-free rate, r*?
2.59%
2.88%
3.20%
3.52%
3.87%

5-Assume that the risk-free rate remains constant, but the market risk premium declines. Which of the following is most likely to occur?
a-The required return on a stock with beta = 1.0 will not change.
b-The required return on a stock with beta > 1.0 will increase.
c-The return on "the market" will remain constant.
d-The return on "the market" will increase.
e-The required return on a stock with beta < 1.0 will decline

Expert answered the question
Dear Student,