Bus 401 Week 2 Quiz Version B

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In this paperwork of BUS 401 Week 2 Quiz Version b you will find the answers on the next questions: 1. Beta is a statistical measure of (Points : 1) 2. At what rate must $500 be compounded annually for it to grow to $1,079.46 in 10 years? (Points : 1) 3. How much money must you pay into an account at the end of each of 20 years in order to have $100,000 at the end of the 20th year? Assume that the account pays 6% per year, and round to the nearest $1. (Points :1) 4. Halverson, Inc. just issued $1,000 par 20-year bonds. The bonds sold for $936 and pay interest semi-annually. Investors require a rate of 7.00% on the bonds. What is the amount of the semi-annual interest payment on the bonds? (Points : 1) 5. What is the present value of $15,500 to be received 12 years from today? Assume a discount rate of 7.5% compounded annually and round to the nearest $1. (Points : 1) 6. Finance theory suggests that the current market value of a bond is based upon which of the following? (Points : 1) 7. A typical measure for the risk-free rate of return is the (Points : 1) 8. A financial advisor tells you that you can make your child a millionaire if you just start saving early. You decide to put an equal amount each year into an investment account that earns 7.5% interest per year, starting on the day your child is born. How much would you need to invest each year (rounded to the nearest dollar) to accumulate a million for your child by the time he is 35 years old? (Your last deposit will be made on his 34th birthday.) (Points : 1) 9. You decide you want your child to be a millionaire. You have a son today and you deposit $15,000 in an investment account that earns 9% per year. The money in the account will be distributed to your son whenever the total reaches $1,000,000. How old will your son be when he gets the money (rounded to the nearest year)? (Points : 1) 10. How much money must you pay into an account at the end of each of 20 years in order to have $100,000 at the end of the 20th year? Assume that the account pays 6% per year, and round to the nearest $1. (Points : 1) 11. Preferred stock is similar to a bond in the following way (Points : 1) 12. A financial advisor tells you that you can make your child a millionaire if you just start saving early. You decide to put an equal amount each year into an investment account that earns 7.5% interest per year, starting on the day your child is born. How much would you need to invest each year (rounded to the nearest dollar) to accumulate a million for your child by the time he is 35 years old? (Your last deposit will be made on his 34th birthday.) (Points : 1) 13. The present value of $1,000 to be received in 5 years is ________ if the discount rate is 7.8%. (Points : 1) 14. A typical measure for the risk-free rate of return is the (Points : 1) 15. The capital asset pricing model (Points : 1) 16. Assume that Brady Corp. has an issue of 18-year $1,000 par value bonds that pay 7% interest, annually. Further assume that today's required rate of return on these bonds is 5%. How much would these bonds sell for today? Round off to the nearest $1. 17. What is the value of a bond that matures in 5 years, has an annual coupon payment of $110, and a par value of $2,000? Assume a required rate of return of 7%. (Points : 1) 18. A corporate bond has a coupon rate of 12%, a yield to maturity of 10.55%, a face value of $1,000, and a market price of $850. Therefore, the annual interest payment is (Points : 1)

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Business - General Business . Question : The longer we have to wait for a future amount to be received: Student Answer: the lower its present value will be. the higher its present value will be. Time does not affect present value, so it doesn’t matter how long we have to wait. Beyond 10 years the value doesn’t change anymore because 10 years might as well be 20 years. Instructor Explanation: The answer can be found in Section 4.3: The Time Value of a Single Cash Flow. Points Received: 1 of 1 Comments: 2. Question : Compounding means that: Student Answer: dollar interest the first year is multiplied by the number of years to get total interest. the same dollar amount of interest is paid each period. interest is paid on interest earned in earlier periods. the rate of interest grows over time. Instructor Explanation: The answer can be found in Section 4.2: Compound and Simple Interest. Points Received: 1 of 1 Comments: 3. Question : An ordinary annuity has its first payment ______, but an annuity due has its first payment _________. Student Answer: at the beginning of the period; at the beginning of the period. at the beginning of the period; at the end of the period. at the end of the period; at the end of the period. at the end of the period; at the beginning of the period. Instructor Explanation: The answer can be found in Section 4.4: Valuing Multiple Cash Flows. Points Received: 1 of 1 Comments: 4. Question : The great majority of stock trades occur: Student Answer: in the secondary markets. in the primary market. as IPOs (initial public offerings). directly between the company and investors. Instructor Explanation: The answer can be found in Section 5.1: Stocks. Points Received: 1 of 1 Comments: 5. Question : Shareholders gains come in the form of: Student Answer: only dividends. only capital gains. dividends and capital gains. interest payments. Instructor Explanation: The answer can be found in the introduction to Chapter 5. Points Received: 1 of 1 Comments: 6. Question : Interest rates are given as annual rates. If semiannual (twice a year) compounding is being used, then you would make the following adjustments: Student Answer: Double the rate and double the number of years. Double the rate and halve the number of years. Halve the rate and halve the number of years. Halve the rate and double the number of years. Instructor Explanation: The answer can be found in Section 4.3: The Time Value of a Single Cash Flow. Points Received: 1 of 1 Comments: 7. Question : Which of the following is true of the structure of a zero-coupon bond? Student Answer: an annuity of interest payments and a single principal payment at maturity no interim interest payments but a variable payment at maturity, depending on interest rates an annuity of payments comprised of both interest and principal no interim interest payments and a single payment at maturity Instructor Explanation: The answer can be found in Section 5.2: Bonds. Points Received: 1 of 1 Comments: 8. Question : If we make the assumption that a company’s dividends grow at some constant rate, then we can value the stock as: Student Answer: a growing perpetuity. a growing annuity. a perpetuity. an annuity. Instructor Explanation: The answer can be found in Section 5.1: Stocks. Points Received: 1 of 1 Comments: 9. Question : Which of the following is NOT true of preferred stock? Student Answer: Preferred stock generally pays a fixed dividend. Preferred stock is a perpetuity. Dividends on preferred stock are tax deductible. Preferred stock dividends have a higher priority than common stock dividends. Instructor Explanation: The answer can be found in Section 5.1: Stocks. Points Received: 1 of 1 Comments: 10. Question : Zeta Corporation just paid a $2.00 dividend. Analysts believe that Zeta Corporation’s dividend will grow by 20% next year, and then settle into a constant growth regime at 5% per year into the future. If investors assign a required rate of return of 12% to Zeta’s stock, what should the stock sell for today? Student Answer: $30.00 $32.14 $34.29 $36.00 Instructor Explanation: The answer can be found in Section 5.1: Stocks. Points Received: 1 of 1

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Get yourself a good water bottle to bring to school. Remain hydrated all day. If you have a full schedule and have to skip meals, you should at least make sure you get enough water. Drinking during the day frequently allows you to keep focused on what you're doing. Refilling water bottles is easier with some of the modern water fountains.