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2009-05-03_162340_A_firm_has_invested_in_corporate_bonds

# 2009-05-03_162340_A_firm_has_invested_in_corporate_bonds -...

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4)A firm has invested in corporate bonds; it may engage in a financial futures contract in order to protect itself from A) Inflation B) Changes in hedging activities C) Declining Interest Rates D) Rising interest rates 5) Dr. J. wants to buy a Dell computer which will cost \$2,788 four years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. He can earn 7% annual return. How much should he set aside? 6) Under what conditions must a distinction be made between money to be received today and money to be received in the future?

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Unformatted text preview: B) when current interest rates are different from expected future rates C) when idle money can earn a positive return D) A period of recession 7) To save for her newborn son's college education, Lea Wilson will invest \$1,000 at the beginning of each year for the next 18 years. The interest rate is 12 percent. What is the future value? A) \$63,440 B) \$55,750 C) \$34,931 D) \$7,690 8) You are to receive \$12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today? A) Present value of \$1 B) Future value of \$1 C) Future value of an annuity D) Present value of an annuity of \$1...
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