FIN 310 Midterm Exam http://homeworktimes.com/downloads/fin-310-midterm-exam/
Grading Summary These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the “Details” section below. Date Taken: 8/18/2013 Time Spent: 2 h , 18 min , 16 secs Points Received: 150 / 150 (100%) Question Type: # Of Questions: # Correct: Multiple Choice 20 20 Grade Details – All Questions 1. Question : The purchase and sale of Ford’s stocksafter the original issuance (IPOs) occurs in the: Student Answer: Primary market. Secondary market. Dealer market. Auction market. Liquidation market. Points Received: 5 of 5 Comments: 2. Question : Financial leverage refers to: Student Answer: The amount of debt used in a firm’s capital structure. The ratio of retained earnings to shareholders’ equity. The ratio of paid-in surplus to shareholder’s equity. The ratio of cost-of-goods-sold to total sales. The amount of receivables present in the firm’s asset structure. Points Received: 5 of 5 Comments: 3. Question : The receivables turnover ratio is measured as: Student Answer: Sales plus accounts receivable. Sales divided by accounts receivable. Sales minus accounts receivable, divided by sales.
Accounts receivable times sales. Accounts receivable divided by sales. Points Received: 4 of 4 Comments: 4. Question : The interest rate used to calculate the present value of future cash flows is called the __________ rate. Student Answer: free interest Page 1of 6 Student Gradebook Exam 8/22/2013 https://takeexam.next.ecollege.com/ (NEXT(35e489fa70))/Main/CourseMode/StudentGrad‌ annual interest compound interest simple interest discount Points Received: 8 of 8 Comments: 5. Question : You have $800 that you would like to invest. You have 2 choices: Savings account A which earns 7% compounded semiannually, or savings account B which earns 6.9% quarterly. Which would you chooseand why? Student Answer: A because it has a higher effective annual rate. A because it has a higher quoted rate. B because it has a higher effective annual rate. B because the future value in one year is lower. B because it has the higher quoted rate. Points Received: 8 of 8 Comments: 6. Question : A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a: Student Answer: Par bond. Discount bond. Premium bond. Zero coupon bond. Floating rate bond. Points Received: 8 of 8 Comments:
7. Question : The written, legally binding agreementbetween the corporte borrower and the lender detailing the terms of a bond issue is called the : Student Answer: Indenture. Covenant. Terms of trade. Form 5140. Call provision. Points Received: 8 of 8 Comments: 8. Question : A bond with an annal coupon of $100 originally sold at par for $1,000. The current market interest rate of this bond is 9%. Assuming no risk, this bond will sell at a ____________ today and present the seller with a capital ___________. Student Answer: premium; gain discount; gain premium; loss discount; loss discount; neither loss not gain Points Received: 8 of 8 Comments: 9. Question : You currently have $7,200 in your investment account. You can earn an aveage rate of return of 11.7% per year. How long will you have to wait unil your account is worth $50,000? Student Answer: 9.47 years 11.28 years 14.67 years 17.51 years Instructor Explanation: FV = 50,000; PV = -7,200; i = 11.7%; therefore N = 17.51 years Points Received: 8 of 8 Comments: 10. Question : Felix wants to have $28,000 four years from now to buy a new car. He wants to make one deposit to fund this expenditure.How much does he have to deposit if he will earn 5.5 percent per year on his investment? Student Answer: $22,602.07 $24,414.14 $25,003.09 $26,540.28 Instructor Explanation: FV= -28,000; n = 4; i = 5.5%; therefore PV = 22,602.07 Points Received: 8 of 8 Comments:
11. Question : Twenty years ago, your parents openedan investment account with an initial deposit of $4,000. Today, that account is worth $29,533.32. What average annual rate of return did they earn on their investment? Student Answer: 10.47% 10.51% 11.78% 15.03% Instructor Explanation: FV = 39,533.32; PV = -5000; n = 15; therefore 1 = 14.78 Points Received: 8 of 8 Comments: 12. Question : You purchased a new sports car 45 years ago at a cost of $2,900. Today, you sold that car for $87,500. What annual rate ofreturn did you earn on the vehicle? Student Answer: 7.62% 7.86% 8.04% 8.38% Instructor Explanation: FV = 97,500; PV = -3,900; n= 40; herefore i = 8.38% Points Received: 8 of 8 Comments: 13. Question : You just found your dream car. The car will cost you $30,250. The dealer will lend you the entire amount at 4.85% interest, compounded monthly. for 60 months. What is the amount of the monthly payment? Student Answer: $426.78 $503.19 $572.80 $568.78 Instructor Explanation: Set your calculator to 12 payment per year. PV = -29,700; i = 5.9%; n = 60; therefor PMT = 572.80 Points Received: 8 of 8 Comments: 14. Question : The Corner Bank is offering you a credit card with an APR of 11.9%. The bank compounds the interest rate on a monthly basis. What is the effective annual rate? Student Answer: 12.57% 13.87% 14.03% 14.14% Instructor Explanation: Set calculator to 12 payments per year. Enter 12.59, shift, nom, shift, eff will yield 13.69% Points Received: 8 of 8
Comments: 15. Question : Suzie has $14,000 in her investment account today. She saves $500 a quarter and earns 10% interest compounded quarterly. How much money will she have in her account three years from now? Student Answer: $16,821.87 $18,509.53 $22,300.16 $25,726.22 $26,997.91 Instructor Explanation: Set your calculator to 4 payments per year. PV = 16000; PMT = 500; i = 8%; n = 12; therefor FV = 26,997.91 Points Received: 8 of 8 Comments: 16. Question : You just won a prize and will receive $6,000 today plus $6,000 one year from now. What is this prize worth to you today, if you can earn 7% on your investments.? Student Answer: $9,174.31 $9,587.16 $11,000.00 $11,450.00 $11,607.48 Points Received: 8 of 8 Comments: 17. Question : If a bond’s current price exceeds itspar value, the bond is selling at ____________. Student Answer: a discount par premium Points Received: 8 of 8 Comments: 18. Question : A 8%, $1,000 bond matures in 15 years, pays interest semi-annually, and has a yield-to-maturity of 10.45%. What is the current market price? Student Answer: $938.47 $945.23 $816.42 $785.14 Points Received: 8 of 8 Comments: 19. Question : A 8% annual coupon bond has a face value of $1,000, a market value of $1,012.40, and a yield-to-maturity of 7.85%. How many years is it until the bond matures?
Student Answer: 7.77 years 7.84 years 13.85 years 14.39 years Points Received: 8 of 8 Comments: 20. Question : What kind of relationships between market interest rates and bond prices __________. Student Answer: no relationship inverse directly related Points Received: 8 of 8 Comments: