Reference no: EM132555894

Question 1: Shahhi has $100,000 invested in a 2-stock portfolio. $45,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta?

a) 0.65

b) 1.06

c) 0.80

d) 1.49

e) None of the above

Question 2: You've just joined the investment banking firm of Dewey. They've offered you two different salary arrangements. The first one is that you can have $95,000 per year for the next two years, however, the second one is that you can have $70,000 per year for the next two years, along with a $45,000 signing bonus today. The bonus is paid immediately, and the salary is paid at the end of each year. If the interest rate is 10 percent, which do you prefer?

a. The first option

b. The second option

c. Indifferent

d. Neither

e. None of the above

Question 3: Your father is about to retire, and he wants to buy an annuity that will provide him with $85,000 of income a year for 25 years, with the first payment coming immediately. The going rate on such annuities is 5.15%. How much would it cost him to buy the annuity today?

a. $1,063,968

b. $1,119,966

c. $1,178,912

d. $1,240,960

e. None of the above

Question 4: What is the approximate yield to maturity of a 14 percent coupon rate, $1,000 par value bond priced at $1,160 if it has 16 years to maturity?

a. 10%

b. 11.8%

c. 14%%

d. 20%

e. None of the above

Question 5: You estimate that you will need about $80,000 to send your child to college in eight years. You have about $35,000 now. At what rate will you just reach your goal?

a. 11.28%

b. 10.88%

c. 9.85%

d. 12.14%

e. None of the above