Reveiw Exam 2 - every month if you can receive a 12 return...

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Exam #2 1) A company has a bond outstanding that is presently selling for $1,150 in the market. It has 18 years to maturity and has 7.75% coupon rate, paying interest quarterly. What is the yield to maturity? (10 pts.) 2) A stock is selling $44. It has been growing at 5% per year, and last week paid a $2.75 dividend. What is the yield on this investment? (5 pts.)
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3) You borrow $150,000 from a bank at 6.2% for thirty years to buy your new house.
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a. What is your month payment? (5 pts.) b. In the first payment, what are the components and their amounts? (3 pts.) c. What is the total payment over the thirty years? (3 pts.) d. What is the monthly payments and total payment if you take out a 15 year mortgage? (4 pts.)
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4) What is the EAR of an 6% annual rate loan if it is compounded monthly? (5 pts.) 5) You want to have $2.5 million when you retire in 40 years. How much must you invest
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Unformatted text preview: every month if you can receive a 12% return on investment? (5 pts.) 6) A mutual fund is offering investments that yield 9%. You check the Treasuring fund rate and find that T-bills are paying 6%? a. What is the approximate real return on the investment? (5 pts.) b. What is the nominal rate? (5 pts.) 7) You have a chance to buy this investment for $50,000 that has the following cash flows. You feel you should receive at least an 8% return. What is the net present value of this investment? Should you buy it? What is the IRR? (10 pts.) Year Cashflow 1 $10,000 2 $23,000 3 $12,000 4 $15,000 8) You can invest $4,000 and receive $12,000 back in 9 years. What is your return on investments? (5 pts.) 9) (Essay) Discuss the various financial tasks you can now approach with the present value tools covered during this section of the course? (10 pts.)...
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