Solutions - Midterm I

# Solutions - Midterm I - PID NAME UNIVERSITY OF NORTH...

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1 PID#: N AME : U NIVERSITY OF N ORTH C AROLINA A T C HAPEL H ILL K ENAN -F LAGLER B USINESS S CHOOL B USI 408: C ORPORATE F INANCE S OLUTIONS TO M IDTERM E XAM #1 P ROF . A RZU O ZOGUZ F ALL 2008 ¾ Put your PID number on top of each page and your name on this sheet. ¾ The exam is individual work. You are not allowed to talk to anybody, except your instructor, about the exam. ¾ The Honor System is in effect. After you have finished, sign the pledge on this sheet. ¾ Answer all questions and sub-questions. SHOW ALL WORK and clearly mark answers. When appropriate, use a timeline to ensure maximum partial credit in the event of an error. ¾ This exam is CLOSED BOOK, and CLOSED NOTES. You may only use the formula sheet attached to this exam; any other formula sheet is not allowed. ¾ Make, but state clearly, all the assumptions that you feel are necessary to answer any particular question. ¾ The maximum score is 100 points. I have neither given nor received any aid on this examination.________________

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2 HELPFUL FORMULAS ܸܲ ௔௡௡ ܥ ݎ ൤1 െ 1 ሺ1൅ݎሻ ܸܲ ௔௡௡,௚ ܥ ݎെ݃ ቈ1െ ൬ 1൅݃ 1൅ݎ
3 Part 1: Multiple Choice Questions (5 points per question for a total of 25 points) 1. Which of the following statements are true? I. There is an inverse relationship between interest rates and present values. II. The effective annual interest rate will be higher than the annual percentage rate for a loan that compounds interest monthly. III. There is an inverse relationship between future values and interest rates. IV.

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Solutions - Midterm I - PID NAME UNIVERSITY OF NORTH...

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