Questlon 1 10 out of 10
points
Whats the present value ofa 4year ordinary annuity of $2,250 per year plus an additional $3,000 at the end onear 4 ifthe interest rate is 5%?
Selected Answer: a b. $10,446
Correct Answer: a b. $10,446
Response Feedback: Rati
Personal Financial Planning
The number one goal of Century Management is to assist our clients in the attainment of
financial security through financial planning and money management. The financial planning
process combines planning with ongoing advice to
An individual who elects to receive a given sum of money later than it is due incurs
an opportunity cost. True
A sum of money invested at 9 percent simple interest per year will grow to a larger
amount by the end of 5 years than if it had been invested at
1. Which of the following statements is correct?
d. Time lines can be constructed where some of the payments constitute an
annuity but others are unequal and thus are not part of the annuity.
2. Suppose the real risk-free rate is 2.50% and the future rate
Final Exam Review Questions: Practice Test 1
1.Which of the following types of questions is likely to be the most effective in client
counseling?
open-ended
close-ended
leading
either/or
2. If $100 is deposited today in an account paying 9 percent compoun
Risk-averse investors generally must sacrifice some expected return in order to
reduce the variation in possible outcomes from an investment decision. True
In the field of finance, risk seeking refers to a preference for uncertain outcomes
over certain ou
1. A professional is a person engaged in a field that requires, among other things, a
threshold entrance requirement. True
2. A client's risk tolerance is easy to measure. False
3. A practice standard in the 600 Series is related to defining the scope of
1. Which of the following statements is CORRECT?
a. Two bonds have the same maturity and the same coupon rate. However,
one is callable and the other is not. The difference in prices between the bonds will
be greater if the current market interest rate is
Final Exam Review Questions: Practice Test 1
1.Which of the following types of questions is likely to be the most effective in client
counseling?
open-ended
close-ended
leading
either/or
2. If $100 is deposited today in an account paying 9 percent compoun
1. The present value of a $20,000 perpetuity at a 7 percent discount rate is
Answers:
$285,714.
2. The future value of an ordinary annuity of $1,000 each year for 10 years,
deposited at 3 percent, is
$11,464.
3. The future value of $200 received today and
MID TERM EXAM
1.
Question 1
Which of the following statements is CORRECT?
One of the disadvantages of incorporating your business is that you could
become subject to the firm's liabilities in the event of bankruptcy.
In any partnership, every partner has
Question 1
1.
Suppose you deposit $3,000 today into an account that will earn 5
percent interest. How much will your account be worth at the end of 30
years?
$12,96
6
$90,00
0
$199,3
17
$4,500
3.333 points
Question 2
1.
Joe wants to set one lump sum of mo
1.
"A stock is expected to pay a dividend of $0.75 next year. The required
rate of return is r = 10.5%, and the expected constant growth rate is g =
6.4%. What is the stock's current price?"
17.3
9
17.8
4
18.2
9
18.7
5
19.2
2
2 points
Question 2
1.
"A sto
Question 1
1.
Suppose 1-year T-bills currently yield 7.00% and the future inflation
rate is expected to be constant at 3.20% per year. What is the real riskfree rate of return?
3.80
%
3.99
%
4.19
%
4.40
%
4.62
%
1 year T-bill rate 7% and inflation is 3.2%
Save and Submit
Question 1
1.
Stocks A and B each have an expected return of 15%, a standard
deviation of 20%, and a beta of 1.2. The returns on the two stocks have a
correlation coefficient of +0.6. You have a portfolio that consists of 50% A
and 50% B.
Question 1
1.
Consider an investment that will cost $25,000 and generate the
following stream of cash flows in the future:
year $
1
6,500
2
6,500
3
10,000
4
12,000
5
12,000
What is the net present value of this investment using an 18 percent
discount rate
Question 1
1.
Anderson Systems is considering a project that has the following cash
flow and WACC data. What is the project's NPV?
WACC: 9.00%
Year
Cash flows
0
1
-$1,000
2
$500
3
$500
$500
265.6
5
278.9
3
292.8
8
307.5
2
322.9
2.5 points
Question 2
1.
Da
Question 1
1.
The Lincolns are considering an investment that is expected to pay
$750 per month for the next 10 years. If their required rate of return is 9.5
percent, how much is this investment worth to them today?
$7,89
5
$1,93
2
$7,18
4
$57,9
61
N = 1
Quiz 1
Money markets
Capital markets
Primary markets
Secondary markets
Physical exhanges
Over-the-counter exchanges
Derivatives
Direct finance
Indirect finance
Commercial bank
Investment bank
Insurance company
Includes securities that mature in less than
Save and Submit
Question 1
1.
"You were hired as a consultant to Giambono Company, whose target
capital structure is 40% debt and 60% common equity. The after-tax cost
of debt is 6.00% and the cost of equity is 12.75%. What is its WACC?"
8.98%
10.05
%
9.5
Vinh Tran
Chap 3
3-1.
a.
b.
c.
d.
e.
f.
g.
h.
Total debt = short-term debt (notes payable) + long-term debt = 150,000 + 750,000 = 900,000
Total liabilities and equity = Total assets = 2,500,000
Current assets = Total assets Net plant and equipment = 2,500