FIN 534 Week 4 Quiz 3 (Strayer university)

FIN 534 Week 4 Quiz 3FIN 534 Week 4 Quiz 3 (Strayer university)FIN 534 Week 4 quiz 3
FIN 534 Week 4 quiz 3

Question 1

Which
of the following statements is CORRECT?

Question
2

Which
of the following statements regarding a 30-year monthly payment amortized
mortgage with a nominal interest rate of 10% is CORRECT?

Question
3

A
U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from
today. The nominal interest rate is 6%,
semiannual compounding. Which of the
following statements is CORRECT?

Question
4

You
plan to analyze the value of a potential investment by calculating the sum of
the present values of its expected cash flows.
Which of the following would increase the calculated value of the
investment?

Question
5

You
are considering two equally risky annuities, each of which pays $5,000 per year
for 10 years. Investment ORD is an
ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT?

Question
6

Which
of the following statements regarding a 30-year monthly payment amortized
mortgage with a nominal interest rate of 10% is CORRECT?

Question
7

A
$150,000 loan is to be amortized over 7 years, with annual end-of-year
payments. Which of these statements is
CORRECT?
Answer

Question
8

Which
of the following statements is CORRECT?

Question
9

Which
of the following investments would have the highest future value at the end of
10 years? Assume that the effective
annual rate for all investments is the same and is greater than zero.
Answer

Question
10

Which
of the following statements is CORRECT?

Question
11

Which
of the following statements regarding a 15-year (180-month) $125,000,
fixed-rate mortgage is CORRECT? (Ignore
taxes and transactions costs.)

Question
12

Which
of the following bank accounts has the highest effective annual return?

Question
13

A
U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from
today. The nominal interest rate is 6%,
semiannual compounding. Which of the
following statements is CORRECT?

Question
14

Which
of the following statements is CORRECT?

Question 15

You
are considering two equally risky annuities, each of which pays $5,000 per year
for 10 years. Investment ORD is an
ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT?
Answer

Question
16

Amram
Inc. can issue a 20-year bond with a 6% annual coupon. This bond is not convertible, is not
callable, and has no sinking fund. Alternatively,
Amram could issue a 20-year bond that is convertible into common equity, may be
called, and has a sinking fund. Which of
the following most accurately describes the coupon rate that Amram would have to
pay on the convertible, callable bond?

Question
17

A
Treasury bond has an 8% annual coupon and a 7.5% yield to maturity. Which of the following statements is CORRECT?
Answer

Question 18

Which
of the following bonds has the greatest interest rate price risk?

Question
19

Which
of the following statements is CORRECT?

Question
20

Which
of the following statements is CORRECT?

Question
21

A
15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT?

Question
22

Which
of the following statements is CORRECT?

Question
23

Assume
that all interest rates in the economy decline from 10% to 9%. Which of the following bonds would have the
largest percentage increase in price?

Question
24

A
12-year bond has an annual coupon rate of 9%.
The coupon rate will remain fixed until the bond matures. The bond has a yield to maturity of 7%. Which of the following statements is CORRECT?
Answer

Question
25

A
10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a
premium. Which of the following statements is CORRECT?

Question
26

Which
of the following statements is CORRECT?
Answer

Question
27

Which
of the following statements is CORRECT?

Question
28

A
10-year bond with a 9% annual coupon has a yield to maturity of 8%. Which of the following statements is CORRECT?

Question
29

A
10-year corporate bond has an annual coupon of 9%. The bond is currently selling at par
($1,000). Which of the following
statements is NOT
CORRECT?

Question
30

Which
of the following statements is CORRECT?