2011Exam1_verA

2011Exam1_verA - Version A FINA 363 Fall 2011 Exam 1 1....

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Version A 1. Choose the version of this exam. The version of the exam is found at the top of this page. (a) Version A (b) Version B (c) Version C (d) Version D (e) Version E 2. You are considering a 6 percent coupon bond. When the yield to maturity (YTM) is 8 percent this bond has a price that is its face value. In other words, this bond is traded at a . (a) equal to; par (b) higher than; premium (c) higher than; discount (d) lower than; premium (e) lower than; discount 3. What is the present value of an annuity that pays $5 ; 555 at the end of each year for 5 years when the interest rate is 5%? (a) $24 ; 050 (b) $25 ; 253 (c) $27 ; 431 (d) $28 ; 402 (e) $30 ; 695 4. Which of the following statements is incorrect ? (a) Shareholders maintain both ownership and control of a corporation, while managers do not maintain ownership or control . (b) Debt is senior to equity. Shareholders of a corporation have limited liability . (c) Maximizing the shareholder wealth is the main objective of a manager, but she/he sometimes strays from this goal due to agency problems . price. (e) None of the above statements are incorrect. (All of the above statements are correct.) 1
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5. What is the present value of $50 ; 000 that will be paid 30 months ( 2 : 5 years) from today, when the APR is 24% ? (a) $27 ; 603 (b) $29 ; 202 (c) $47 ; 585 (d) $85 ; 610 (e) $310 ; 741 6. You put $18 ; 181 in a college trust fund for your children today. In order for the balance of the fund to become $181 ; 818 eighteen (18) years from today, what average annual rate of return ( i ) must this fund earn? (a) 10 : 00% (b) 11 : 36% (c) 13 : 65% (d) 16 : 38% (e) 18 : 18% 7. Which of the following statements is incorrect ? (a) According to the Fisher equation, nominal interest rate is usually higher than expected
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2011Exam1_verA - Version A FINA 363 Fall 2011 Exam 1 1....

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