Reference no: EM132519240

Question 1. What is the future value of an ordinary annuity with $500 payments every three months (i.e. 4 times a year), completed over a total time of 10 years, at a nominal rate of 8% compounded quarterly?

a) $5,474.86

b) $7,243.28

c) $30,200.99

d) $129,528.26

Question 2. Jana wants to buy a car in 3 years' time. She is making annual savings of $4,000 at the beginning of each year. The interest rate offered is 5% compounded annually. How much money will she have at the end of the 3 years?

a) $12,610.00

b) $13,240.50

c) $18,120.20

d) $22,102.53

Question 3. What is the present value of $10,000 discounted monthly for 10 years at a nominal rate of 8%?

a) $4,505.23

b) $4,631.93

c) $4,782.43

d) $4,913.73

Question 4. A company's 10-year bonds are yielding 8.5% per year. Treasury bonds with the same maturity are yielding 6.9% per year, and the real risk-free rate (r*) is 2.7%. The inflation premium is 3%, the liquidity premium is 0.5%, and the maturity risk premium is 1.2%. What is the default risk premium on the corporate bonds?

a) 1.1%

b) 2.1%

c) 2.3%

d) 3.5%

Question 5. What is the present value of $1000 in 5 years, compounded weekly, at an interest rate of 4.6%?

a) $735.25

b) $758.91

c) $763.50

d) $798.62

Question 6. Find the present value of an annuity due, discounted annually, that pays $200 per year, with the interest rate today reaching 4.6%, and matures in 5 years.

a) $818.22

b) $875.55

c) $915.83

d) $1,094.44

Question 7. A company's 5-year bonds are yielding 9.3% per year. Treasury bonds with the same maturity are yielding 6.1% per year, and the real risk-free rate (r*) is 2.3%. The inflation premium is 2.4%, the liquidity premium is 1.3%, and the default risk premium is 1.9%. What is the maturity risk premium on the corporate bonds?

a) 0.5%

b) 1.4%

c) 2.7%

d) 3.3%

Question 8. A 5-year corporate bond is yielding 12.3% per year. The real risk-free rate (r*) is 3.5%. Inflation is expected to be 3% this year, 4% next year, and 6% for all years after that. The liquidity premium is 1.2%, and default risk premium is 2.1%. What is the maturity risk premium for this 5-year bond?

a) 0.5%

b) 0.75%

c) 1%

d) 2%

Question 9. Nada puts $500 in her savings account today, and expects to put another $800 at the end of this year, $1,200 the following year, and $2,000 in the third year. The bank compounds interest on a yearly basis and at a rate of 7%. How much is the future value of these payments if they are withdrawn in four years from today?

a) $4,629.12

b) $4,885.23

c) $4,956.85

d) $5,149.31

Question 10. What is the present value of $25,000 discounted quarterly for 7 years at a nominal rate of 6%?

a) $15,890.75

b) $16,626.43

c) $16,477.48

d) $22,525.67