ADMS3530_Final exam_Type A_Winter 2007

ADMS3530_Final exam_Type A_Winter 2007 - Name Section ID #...

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Name Section ID # (Professor Alagurajah’s Sections O (Wednesdays, 7-10 pm) and S (Thursdays, 7-10 pm), Professor Li’s Sections M (Thursdays, 2:30-5:30 pm) and Q (Mondays, 7-10 pm), Professor Tissenbaum’s Sections P (Internet) and R (Mondays, 4-7 pm), and Professor Yildirim’s Sections N (Tuesdays, 7-10 pm) and T (Tuesdays, 2:30-5:30 pm).) AK/ADMS 3530.03 Finance Final Exam Winter 2007 April 26, 2007 Type A Exam This exam consists of 50 multiple choice questions and carries a total of 100 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. 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. 4) Each question is worth 2 points. 5) Unless otherwise stated, interest rates are annual , and bonds have a face value (or par value) of $1,000 . 6) You may use the back of the exam paper as your scrap paper. Numerical questions (2 points each) 1. What is the present value of the following payment stream, discounted at 8 percent annually: $1,000 at the end of year 1, $2,000 at the end of year 2, and $3,000 at the end of year 3? A) $5,022.11 B) $5,144.03 C) $5,423.87 D) $5,520.00 1
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2. What is the present value of a four-year annuity of $100 per year that begins two years from today if the discount rate is 9 percent? A) $297.22 B) $323.86 C) $356.85 D) $388.97 2
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3. $3,000 is deposited into an account paying 10 percent annually, to provide three annual withdrawals of $1,206.34 beginning in one year. How much remains in the account after the second withdrawal? A) $587.32 B) $1,096.67 C) $1,206.34 D) $1,326.97 4. Approximately how much should be accumulated by the beginning of retirement to provide a $2,500 monthly check (to be paid at the end of each month) that will last for 25 years, during which time the fund will earn 8 percent interest with monthly compounding? A) $261,500 B) $323,800 3
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$578,700 D) $690,000 5. An investor buys a ten-year, 7 percent coupon bond for $1,050, holds it for one year and then sells it for $1,040. What was the investor's rate of return over the 1-year holding period? Assume coupons are paid annually. A) 5.71 percent B) 6.00 percent C) 6.67 percent D) 7.00 percent 6. A bond with 10 years until maturity, an 8 percent coupon rate, and an 8 percent original yield to maturity increased in price to $1,107.83 yesterday. What appears to have happened to interest rates? Coupons are paid annually. A)
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ADMS3530_Final exam_Type A_Winter 2007 - Name Section ID #...

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