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ADMS3530_final exam_Type A Part II_Winter 2008

ADMS3530_final exam_Type A Part II_Winter 2008 - Name...

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Name Section ID # (Professor Alagurajah’s Sections O (Wednesdays, 7-10 pm) and S (Thursdays, 7-10 pm), Professor Ho’s Section T (Tuesdays, 2:30-5:30 pm), Professor King’s Section P (Internet), Professor Li’s Sections M (Thursdays, 2:30-5:30 pm) and N (Tuesdays, 7-10 pm), Professor Tissenbaum’s Section Q (Mondays, 7-10 pm), and Professor Yildirim’s Section R (Mondays, 4-7 pm).) AK/ADMS 3530.03 Finance Final Exam Winter 2008 April 10, 2008 Type A Exam - Part II This part consists of 25 multiple choice questions , 2 points each for a total of 50 points . Choose the response which best answers each question. Circle your answer below and fill in your answers on the bubble sheet . Only the bubble sheet is used to determine your exam score . Please do not forget to write your name and ID # at the top of this cover page and on the bubble sheet. Also please write the type of your exam (A or B) on the bubble sheet. Be sure to blacken the bubbles corresponding to your student number. Please note the following points : 1) Read the questions carefully and use your time efficiently . 2) Choose the answers that are closest to yours, because of possible rounding. 3) Keep at least 2 decimal places in your calculations and final answers, and at least 4 decimal places for interest rates. 4) Unless otherwise stated, interest rates are annual , and bonds have a face value (or par value) of $1,000 and pay coupons semiannually . 5) You may use the back of the exam paper as your scrap paper. 16 numerical questions (2 points each) 26. Your firm needs to borrow $100,000 for 3 years and the bank is willing to lend you the money. Which of the following methods is the most cost effective way (i.e., will cost the least) for your company to repay the loan? A) A lump sum repayment of the loan at the end of 3 years from now of $133,100. B) Pay back $10,500 each at the end of years 1 and 2 from today and $110,500 at the end of year 3 from now. C) Repay $40,921.31 each at the end of years 1, 2 and 3 from today. D) Doesn’t matter which option you choose. They all cost the same. 1
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27. Ashley Ltd. has 100 bonds outstanding (par value per bond = $1,000). The nominal required rate of return on these bonds is currently 10 percent, and interest is paid semiannually. The bonds mature in 5 years, and their current market value is $768 per bond. What is the annual coupon interest
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ADMS3530_final exam_Type A Part II_Winter 2008 - Name...

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