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ADMS3530-Final-F06

ADMS3530-Final-F06 - Name Section ID(Prof Kings section A...

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Page 1 Name __________________________ Section _____ ID # ____________________ (Prof. King’s section A; Prof. Kohen’s sections D and G; Prof. Tahani’s sections C, E and F; Prof. Wong’s sections B and H) AK/ADMS 3530 Final Exam Fall 2006 December 19, 2006 7 -10 pm Type A Exam This exam consists of 50 multiple choice questions. Choose the response which best answers each question. Circle your answers below, and fill in your answers on the bubble sheet . Only the bubble sheet is used to determine your exam score . BE SURE TO BLACKEN THE BUBBLES CORRESPONDING TO YOUR STUDENT NUMBER. Please note the following eight points : 1) Please use your time efficiently and start with the questions that you are most comfortable with first. Remember : every question carries the same weight, so please do NOT spend too much time on one particular question; 2) Read the exam questions carefully; 3) Choose the answers that are closest to yours, because of possible rounding; 4) Keep at least 2 decimal places in your calculations and final answers, and at least 4 decimal places for interest rates; 5) Interest rates are annual unless otherwise stated; 6) Bonds pay semi-annual coupons unless otherwise stated; 7) Bonds have a par value (or face value) of \$1,000; and 8) You may use the back of the exam paper as your scrap paper. Good Luck.

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Page 2 Numerical Questions 1. What is the annual rate compounded monthly that is equivalent to 8% compounded quarterly? A) 0.66% B) 7.72% C) 7.95% D) 8.00% 2. How long (approximately) would take to pay back a \$200,000 loan with a monthly payment equal to \$1,510 if the quoted interest rate is 6% compounded monthly? A) 3 years B) 8 years C) 11 years D) 18 years 3. What is the price of a 20-year bond with a 5% coupon rate, a face value of \$1,000 and pays semi-annual coupons, if the effective annual YTM is 5%. A) \$1,000 B) \$1,008 C) \$1,050 D) \$2,000 4. A perpetual bond with a 6% coupon rate and a \$1,000 face value sells for \$1,200. What is the YTM? A) 5% B) 6% C) 8% D) 10% 5. A stock is expected to pay a \$2 dividend next year and a \$5 dividend in year 3. You buy the stock today at \$75 and expect to sell it at the end of year 3 realizing an expected annual return of 0%. What is the expected stock price at the end of year 3? A) \$68 B) \$75 C) \$82 D) \$100
Page 3 6. What is your expected rate of return on a stock that you buy at \$113 today, if you receive the following dividends: Div 1 = \$3, Div 2 = \$4, Div 3 = \$5; and you sell it at the end of year 3 at P 3 = \$120? A) 1.41% B) 4.15% C) 5.32% D) 5.46% 7. Oak Furnishings is considering a project that has an up-front cost and a series of positive cash flows. The project’s estimated cash flows are summarized below: Project Year Cash Flow 0 ? 1

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ADMS3530-Final-F06 - Name Section ID(Prof Kings section A...

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