ashworth college BU340 all Online Exams latest 2016 march

ashworth college BU340 Online Exam 1 latest 2016 marchPart 1 of 1 – Lesson 1 Questions 100.0/ 100.0 PointsQuestion 1 of 205.0/ 5.0 Points__________ is the area of finance concerned with activities like borrowing funds to finance projects such as plant expansions or new product launches.A. Working capital managementB. International financeC. InvestmentsD. Corporate financeQuestion 2 of 205.0/ 5.0 PointsAt its most basic level, the function of financial intermediaries is to:A. track and report interest rates.B. move money from lenders to borrowers and back again.C. report all financial transactions to the federal government.D. effect a transfer of wealth in society.Question 3 of 205.0/ 5.0 PointsCapital structure is best defined by which of the following questions?A. How will we fund our product and service choices?B. What business are we in?C. How will we manage our day-to-day financial needs?D. What is our firm’s best choice for corporate governance?Question 4 of 205.0/ 5.0 PointsWhich of the following is an advantage of a sole proprietorship?A. The owner’s unlimited liabilityB. The lack of continuity upon death of the ownerC. The ease of start-upD. The ability to raise capitalQuestion 5 of 205.0/ 5.0 Points”Concern with the multinational elements of financial activities” best describes which of the four main areas of finance?A. InvestmentsB. International financeC. Corporate financeD. Financial institutions and marketsQuestion 6 of 205.0/ 5.0 PointsThe process of planning, evaluating, selecting, and managing the long-term operating projects of the company is termed:A. capital budgeting.B. capital structure.C. accounts receivable management.D. working capital management.Question 7 of 205.0/ 5.0 PointsWhich of the following compensation packages is likely to work best for executive managers?A. Piece-mealB. Stock optionsC. Quarterly bonusesD. CommissionQuestion 8 of 205.0/ 5.0 PointsFinancial assets that will mature within a year are bought and sold in the __________ market.A. debtB. capitalC. stockD. moneyQuestion 9 of 205.0/ 5.0 PointsThe sale of “new” securities, where the financial asset is being traded for the very first time, is said to take place in the __________ market.A. primaryB. moneyC. secondaryD. capitalQuestion 10 of 205.0/ 5.0 Points__________ is a major disadvantage of the corporate form of business.A. Double taxationB. Unlimited liabilityC. Lack of ability to raise capitalD. Transfer of ownershipQuestion 11 of 205.0/ 5.0 Points__________ is the area of finance concerned with the activities of buying and selling financial assets such as stocks and bonds.A. InvestmentsB. Corporate financeC. International financeD. Financial markets and institutionsQuestion 12 of 205.0/ 5.0 PointsIn agency theory, the owners of the business are referred to as __________, and the managers are referred to as __________.A. bondholders, principalsB. stockholders, bondholdersC. agents, principalsD. principals, agentsQuestion 13 of 205.0/ 5.0 PointsA __________ is a business that is jointly owned by two or more individuals.A. partnershipB. sole proprietorshipC. subchapter S corporationD. corporationQuestion 14 of 205.0/ 5.0 PointsThe form of business organization in the United States that has the greatest amount of capital is:A. the sole proprietorship.B. the partnership.C. the subchapter corporation.D. the publicly traded corporation.Question 15 of 205.0/ 5.0 PointsCurrencies are bought and sold in __________ markets.A. equityB. debtC. derivativesD. foreign exchangeQuestion 16 of 205.0/ 5.0 PointsOptions are bought and sold in __________ markets.A. equityB. debtC. derivativesD. foreign exchangeQuestion 17 of 205.0/ 5.0 PointsCapital budgeting is best defined by which of the following questions?A. How will we fund our product and service choices?B. What business are we in?C. How will we manage our day-to-day financial needs?D. What is our firm’s best choice for corporate governance?Question 18 of 205.0/ 5.0 PointsOf the following, which is NOT one of the four main areas of finance?A. International FinanceB. Corporate FinanceC. InvestmentsD. All are considered main areas of finance.Question 19 of 205.0/ 5.0 PointsThe problem of motivating one party to act in the best interest of another party is known as the:A. leadership directive.B. management priority.C. principal-agent problem.D. sigma six structure.Question 20 of 205.0/ 5.0 Points__________ addresses the question of what business we should be in over the long run.A. Capital budgetingB. Capital structureC. Working capital managementD. Accounts receivable managementashworth college BU340 Online Exam 2 latest 2016 march.784px;”=””>Part 1 of 1 – Lesson 2 Questions 100.0 100.0 PointsQuestion 1 of 205.0 5.0 PointsDebts to be paid more than one year from now are claims against the firm’s assets; in other words, they are long-term liabilities. These claims are from __________ who have provided capital to the firm but whose entire repayment is not due during the coming year or operating cycle.A. banks and bondholdersB. banks and stockholdersC. stockholders and bondholdersD. all long-term lendersQuestion 2 of 205.0 5.0 PointsNet income isA. not cash flow.B. the cash flow from the operations of the company during the period.C. the increase or decrease in cash flow for the period.D. earnings before interest and taxes.Question 3 of 205.0 5.0 PointsUnderstanding the sources and uses of cash in the recent past will enable a manager to __________ the cash flow for a potential project of the firm.A. determine with perfect precisionB. forecast with perfect precisionC. predict more accuratelyD. know todayQuestion 4 of 205.0 5.0 PointsWhich one of the answers below is NOT one of the three components of the Cash Flow from AssetsA. Operating Cash FlowB. Net Capital SpendingC. Noncash expensesD. Change in Net Working CapitalQuestion 5 of 205.0 5.0 PointsThe SEC has a site named EDGAR thatA. provides, at a cost, online access to a company’s financial reports.B. offers investors free advice on what stocks to pick.C. provides an online tutorial on how to understand the government’s role in affecting stock prices.D. provides an online tutorial that will help new viewers find a company and its financial statements.Question 6 of 205.0 5.0 PointsThree fundamental issues separate net income and cash flow. Which of the answers below is NOT one of these three fundamental issuesA. Accrual accountingB. Noncash accountingC. Noncash expense itemsD. Interest expenseQuestion 7 of 205.0 5.0 PointsWhich of the following items may be included on all income statements atyahoo.finance.com, even though they may not be part of an individualcompany’s income statement for that yearA. Cost of Revenue and Extraordinary ItemsB. Goodwill and Effect of Accounting ChangesC. Effect of Accounting Changes and Deferred Long-Term Asset ChargesD. Cost of Revenue and Treasury StockQuestion 8 of 205.0 5.0 PointsTo find operating cash flow for the business for the year, add depreciation expense to EBIT and thenA. subtract the interest expenses.B. add the taxes.C. subtract the taxes.D. add interest expenses.Question 9 of 205.0 5.0 PointsWhich of the sections below is NOT contained in the annual reportA. Prediction of competitors’ returnsB. Company highlightsC. President’s letter to the shareholdersD. Description of the company’s activities (usually with pictures and graphs)Question 10 of 205.0 5.0 PointsOne of the key components to making financial decisions is toA. understand the timing and amount of dividends.B. understand the timing and amount of cash flow.C. understand the timing of EBIT.D. understand the amount of net income.Question 11 of 205.0 5.0 PointsThere are four primary financial statements that are used to measure the performance of a firm. Which of the choices below are included in these fourA. The balance statement and income statementB. The income sheet and statement of retained earningsC. The statement of cash flow and statement of balanceD. The balance sheet and statement of cash flowQuestion 12 of 205.0 5.0 PointsWhich of the following statements is falseA. Financial data on the Internet or via company annual reports provide a wealth of knowledge about the operations of the firm.B. Knowing the relationship of the primary financial statements and how to utilize the data in each are important tools for all financial managers.C. Although the annual report of a company is printed and mailed to owners and the SEC, much of the financial statement information is available at various financial websites.D. EDGAR stands for Electronic Data Gathering Analysis and Retribution.Question 13 of 205.0 5.0 PointsWhich of the following statements is trueA. The finance manager uses the framework of the income statement to findthe operating income of the company (an accounting measure), which isalso the true cash flow from operations.B. In accrual-based accounting, revenue is recorded at the time of sale ifthe revenue has been received in cash.C. Three fundamental issues separate net income and cash flow accrualaccounting, noncash expense items, and interest expense.D. Generally Accepted Accounting Principles (GAAP) in the United States donot allow the use of accrual accounting to record revenue.Question 14 of 205.0 5.0 PointsWhich of the statements below is trueA. Accounting Identity is Assets = Liabilities – Owners’ Equity.B. Accounting Identity is Assets = Liabilities + Owners’ Equity.C. Accounting Identity is Assets = Owners’ Equity – Liabilities.D. Accounting Identity is Liabilities = Assets + Owners’ Equity.Question 15 of 205.0 5.0 PointsCash and Equivalents are $1,561; Short-Term Investments are $1,052; Accounts Receivables are $3,616; Accounts Payable is $5,173; Short-Term Debt is $288; Inventories are $1,816; Other Current Liabilities are $1,401; and Other Current Assets are $707. What is the amount of Total Current LiabilitiesA. $8,752B. $6,974C. $6,862D. $6,574Question 16 of 205.0 5.0 PointsThe purpose of studying financial statements isA. to mechanically build portfolio analysis.B. to understand those portions of the statements that have relevance for financial decision making.C. to primarily investigate all portions of the statements that have relevance for dividend policy.D. to mechanically learn how to read and understand footnotes.Question 17 of 205.0 5.0 PointsThe annual report of a company isA. printed and mailed to owners and the SEC.B. not available online.C. not mailed to owners but only to the SEC.D. always available online in more detail.Question 18 of 205.0 5.0 PointsWhich of the statements below is falseA. The income statement summaries and categorizes a company’s revenues and expenses for that period.B. Typically, income statements are prepared quarterly and annually for distribution outside the company, but usually monthly for internal managers.C. The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes (EBIT).D. The balance sheet reports the performance of the firm over the past period. It summarizes and categorizes a company’s revenues and expenses for that period.Question 19 of 205.0 5.0 PointsWhich of the following identities is trueA. Operating Cash Flow = EBIT + Depreciation – TaxesB. Net Capital Spending = Ending Net Fixed Assets – DepreciationC. Change in Net Working Capital (NWC) = Current Assets – Current LiabilitiesD. Cash Flow from Assets = Operating Cash Flow + Net Capital SpendingQuestion 20 of 205.0 5.0 PointsNotes to the financial statements help explain many of the details necessary to gain a more complete picture of the firm’sA. capital budget.B. choice of management.C. dividend policy.D. performance.ashworth college BU340 Online Exam 3 latest 2016 march.784px;”=””>Part 1 of 1 – Lesson 3 Questions 100.0/ 100.0 PointsQuestion 1 of 20 5.0/ 5.0 PointsYou can invest your money at a rate of 7% per year. At this rate it will take you just over __________ years to double your money. Use the Rule of 72 to determine your answer.A. 4B. 10C. 5.5D. There is not enough information to answer this question.Question 2 of 20 5.0/ 5.0 PointsYou won the state lottery and took the payout as a $1,283,475 lump sum today. Your spouse has decided that you need to invest this money for the next 10 years and can expect it to earn an average annual rate of return of 7.18%. If this comes to pass, how much money will be in the account at the end of the period?A. $8,471,253B. $2,567,586C. $1,920,388D. $1,890,471Question 3 of 20 5.0/ 5.0 PointsWhich of the following actions will increase the present value of an investment?A. Decrease the interest rate.B. Decrease the future value.C. Increase the amount of time.D. All of the above will increase the present value.Question 4 of 20 5.0/ 5.0 PointsWhich of the following will result in a future value greater than $100?A. PV = $50, r = an annual interest rate of 10%, and n = 8 years.B. PV = $75, r = an annual interest rate of 12%, and n = 3 years.C. PV = $90, r = an annual interest rate of 14%, and n = 1 year.D. All of the future values are greater than $100.Question 5 of 20 5.0/ 5.0 PointsWhich of the following investments has a larger future value? A $100 investment earning 10% per year for 5 years, or a $100 investment earning 5% per year for 10 years?A. An investment of $100 invested at 10% per year for 5 years because it has a future value of $161.05.B. An investment of $100 invested at 10% per year for 5 years because it has a future value of $162.89.C. An investment of $100 invested at 5% per year for 10 years because it has a future value of $161.05.D. An investment of $100 invested at 5% per year for 10 years because it has a future value of $162.89.Question 6 of 20 5.0/ 5.0 PointsThe one-time payment of money at a future date is often called a:A. lump-sum payment.B. present value.C. principal amount.D. perpetuity payment.Question 7 of 20 5.0/ 5.0 PointsGasoline cost $.10 per gallon in 1930. Over the next 60 years, the price rose at an average rate of 4.42% per year. Based on this information, what was the average price of a gallon of gas in 1990?A. $1.34 per gallonB. $1.53 per gallonC. $2.65 per gallonD. $2.75 per gallonQuestion 8 of 20 5.0/ 5.0 PointsA two-year investment of $200 is made today at an annual interest rate of 6%. Which of the following statements is true?A. The future value would be greater if the interest rate was higher.B. The present value would be greater if the interest rate was higher.C. The future value would be greater if the interest rate was lower.D. The future value does not change as the interest rate changes.Question 9 of 20 5.0/ 5.0 PointsA furniture store has a sofa on sale for $399, with the payment due one year from today. The store is willing to discount the price at an annual rate of 5% if you pay today. What is the amount if you pay today?A. $380B. $399C. $419D. $394Question 10 of 20 5.0/ 5.0 PointsYour production manager informs you that currently the firm is producing 1,438 heating units per month but has plans to increase production at a rate of 5% per month until the firm is producing 3,000 units per month. How many months will this take?A. 27.33 monthsB. 15.07 monthsC. 14 monthsD. There is not enough information to answer this question.Question 11 of 20 5.0/ 5.0 PointsIn 1975, the era of major league baseball free agency began. The average player salary was $16,000. In 1980, the average salary was $30,000. What was the average annual growth in the minimum salary in major league baseball over those five years?A. 37.50%B. 13.40%C. 5.92%D. 10.67%Question 12 of 20 5.0/ 5.0 PointsAn investment promises a payoff of $195 two and one-half years from today. At a discount rate of 7.5% per year, what is the present value of this investment?A. $162.03B. $162.75C. $169.47D. There is not enough information to answer this question.Question 13 of 20 5.0/ 5.0 PointsA $100 deposit today that earns an annual interest rate of 10% is worth how much at the end of two years? Assume all interest received at the end of the first year is reinvested the second year.A. $100B. $120C. $121D. $122Question 14 of 20 5.0/ 5.0 PointsAverage U.S. wages in 1990 were $28,960, far larger than the average wage in 1930 of $1,970. What was the average annual increase in wages over this 60-year period?A. 3.31%B. 2.45%C. 24.50%D. 4.58%Question 15 of 20 5.0/ 5.0 PointsWhich of the following is the correct formula for calculating the future value?A.B.FV = PV × (1 + r)nC.PV = FV × (1 + r)nD.Question 16 of 20 5.0/ 5.0 Points__________ is simply the interest earned in subsequent periods on the interest earned in prior periods.A. Quoted interestB. Anticipated interestC. Simple interestD. Compound interestQuestion 17 of 20 5.0/ 5.0 PointsWhich of the following actions will decrease the present value of an investment?A. Decrease the interest rate.B. Decrease the future value.C. Decrease the amount of time.D. All of the above will decrease the present value.Question 18 of 20 5.0/ 5.0 PointsRory has $2,500 but needs $5,000 to purchase a new golf cart. If he can invest his money at a rate of 12% per year, approximately how many years will it take the money in Rory’s account to grow to $5,000? Use the Rule of 72 to determine your answer.Note: The golf cart’s price may have changed by the time Rory’s account reaches a value of $5,000.A. 2 yearsB. 4 yearsC. 6 yearsD. 8 yearsQuestion 19 of 20 5.0/ 5.0 PointsYour university is running a special offer on tuition. This year’s tuition cost is $18,000. Next year’s tuition cost is scheduled to be $19,080. The university offers to discount next year’s tuition at a rate of 6% if you agree to pay both years’ tuition in full today. How much is the total tuition bill today if you take the offer?A. $18,000B. $34,981C. $37,080D. $36,000Question 20 of 20 5.0/ 5.0 PointsYou could double your money in about 9 years if you could earn an annual rate of return of what? Use the Rule of 72 to determine your answer.A. You would need to earn an annual rate of return of about 12%.B. You would need to earn an annual rate of return of about 10%.C. You would need to earn an annual rate of return of about 8%.D. There is not enough information to answer this question.ashworth college BU340 Online Exam 5 latest 2016 march.784px;”=””>Part 1 of 2 – Lesson 4 Questions 50.0/ 50.0 PointsQuestion 1 of 402.5/ 2.5 PointsPresent value calculations do which of the following?A. Compound all future cash flows into the futureB. Compound all future cash flows back to the presentC. Discount all future cash flows back to the presentD. Discount all future cash flows into the futureQuestion 2 of 402.5/ 2.5 PointsYour employer has agreed to place year-end deposits of $1,000, $2,000, and $3,000 into your retirement account. The $1,000 deposit will be one year from today, the $2,000 deposit two years from today, and the $3,000 deposit three years from today. If your account earns 5% per year, how much money will you have in the account at the end of Year 3 when the last deposit is made?A. $5,357.95B. $6,000C. $6,202.50D. $6,727.88Question 3 of 402.5/ 2.5 PointsThe furniture store offers you no-money-down on a new set of living room furniture. Further, you may pay for the furniture in three equal annual end-of-the-year payments of $1,000 each with the first payment to be made one year from today. If the discount rate is 6%, what is the present value of the furniture payments?A. $3,183.60B. $3,000C. $2,833.39D. $2,673.01Question 4 of 402.5/ 2.5 PointsIf you borrow $100,000 at an annual rate of 8% for a 10-year period and repay the interest of $8,000 at the end of each year prior to maturity and the final payment of $108,000 at the end of 10 years, then you have just repaid what type of loan?A. Amortized loanB. Interest-only loanC. Discount loanD. Compound loanQuestion 5 of 402.5/ 2.5 PointsWhen you pay off the principal and all of the interest at one time at the maturity date of the loan, we call this type of loan a(n):A. amortized loan.B. interest-only loan.C. discount loan.D. compound loan.Question 6 of 402.5/ 2.5 PointsYou currently have $67,000 in an interest-earning account. From this account, you wish to make 20 year-end payments of $5,000 each. What annual rate of return must you make on this account to meet your objective?A. 4.16%B. 5.03%C. 6.42%D. 7.32%Question 7 of 402.5/ 2.5 PointsIf you borrow $100,000 at an annual rate of 8% for a 10-year period and repay with 10 equal annual end-of-the-year payments of $14,902.95, then you have just repaid what type of loan?A. Amortized loanB. Interest-only loanC. Discount loanD. Compound loanQuestion 8 of 402.5/ 2.5 PointsYou have saved $47,000 for college and wish to use $15,000 per year. If you use the money as an ordinary annuity and earn 6.15% on your investment, how many years will your annuity last? Use a calculator to determine your answer.A. 4.27 yearsB. 3.13 yearsC. 3.59 yearsD. 3.36 yearsQuestion 9 of 402.5/ 2.5 PointsWhat is the present value of a stream of annual end-of-the-year annuity cash flows if the discount rate is 0%, and the cash flows of $50 last for 20 years?A. Less than $1,000B. Exactly $1,000C. More than $1,000D. This question cannot be answered because we have an interest rate of 0%.Question 10 of 402.5/ 2.5 PointsIf you borrow $50,000 at an annual interest rate of 12% for six years, what is the annual payment (prior to maturity) on an interest-only type of loan?A. $0B. $6,000C. $8,333.33D. $12,161.29Question 11 of 402.5/ 2.5 PointsYour parents have an investment portfolio of $400,000, and they wish to take out cash flows of $50,000 per year as an ordinary annuity. How long will their portfolio last if the portfolio is invested at an annual rate of 4.50%? Use a calculator to determine your answer.A. 8 yearsB. 9.10 yearsC. 9.60 yearsD. 10.14 yearsQuestion 12 of 402.5/ 2.5 PointsA/An __________ is a series of equal end-of-the-period cash flows.A. annuityB. annuity dueC. perpetuity dueD. None of the aboveQuestion 13 of 402.5/ 2.5 PointsWhat is the future value in Year 25 of an ordinary annuity cash flow of $2,000 per year at an interest rate of 10% per year?A. $66,505.81B. $55,000.00C. $196,694.12D. $216,363.53Question 14 of 402.5/ 2.5 PointsWhich is greater, the present value of a $1,000 five-year ordinary annuity discounted at 10%, or the present value of a $1,000 five-year annuity due discounted at 10%?A. The ordinary annuity is worth more with a present value of $3,790.79.B. The annuity due is worth more with a present value of $4,169.87.C. The ordinary annuity is worth more with a present value of $4,169.87.D. The annuity due is worth more with a present value of $4,586.85.Question 15 of 402.5/ 2.5 PointsYou just won the Publisher’s Clearing House Sweepstakes and the right to 20 after-tax ordinary annuity cash flows of $163,291.18. Assuming a discount rate of 7.50%, what is the present value of your lottery winnings? Use a calculator to determine your answer.A. $3,265,823.60B. $1,789,520.81C. $1,664,670.52D. There is not enough information to answer this question.Question 16 of 402.5/ 2.5 PointsWhat is the present value of a lottery paid as an annuity due for 20 years if the cash flows are $250,000 per year and the appropriate discount rate is 7.50%?A. $5,000,000.00B. $3,186,045.39C. $2,739,769.55D. $2,548,622.84Question 17 of 402.5/ 2.5 PointsThe main variables of the TVM equation are:A. present value, future value, time, interest rate, and payment.B. present value, future value, perpetuity, interest rate, and payment.C. present value, future value, time, annuity, and interest rate.D. present value, future value, perpetuity, interest rate, and principal.Question 18 of 402.5/ 2.5 PointsRandy W. recently won the Western States Lottery of $6,500,000. The lottery pays either a total of twenty $325,000 payments per year with the first payment today (i.e., an annuity due), or $3,500,000 today. At what interest rate would Randy be financially indifferent between these two payout choices?A. 5.37%B. 7.36%C. 7.76%D. 8.00%Question 19 of 402.5/ 2.5 PointsYour company just sold a product with the following payment plan: $50,000 today, $25,000 next year, and $10,000 the following year. If your firm places the payments into an account earning 10% per year, how much money will be in the account after collecting the last payment?A. $99,000B. $98,000C. $88,500D. $85,000Question 20 of 402.5/ 2.5 PointsYour firm intends to finance the purchase of a new construction crane. The cost is $1,500,000. What is the size of the first payment if the crane is financed with an interest-only loan at an annual rate of 8.50%?A. $228,611.56B. $127,500C. $3,391,475.16D. There is not enough information to answer this question.Part 2 of 2 – Lesson 5 Questions 50.0/ 50.0 PointsQuestion 21 of 402.5/ 2.5 PointsIf you take out a loan from a bank, you will be charged:A. for principal but not interest.B. for interest but not principal.C. for both principal and interest.D. for interest only.Question 22 of 402.5/ 2.5 PointsAssume that you are willing to postpone consumption today and buy a certificate of deposit (CD) at your local bank. Your reward for postponing consumption implies that at the end of the year:A. you will be able to consume fewer goods.B. you will be able to buy the same amount of goods or services.C. you will be able to buy fewer goods or services.D. you will be able to buy more goods or services.Question 23 of 402.5/ 2.5 PointsAssume that Don is 45 years old and has 20 years for saving until he retires. He expects an APR of 8.5% on his investments. How much does he need to save if he puts money away annually in equal end-of-the-year amounts to achieve a future value of $1 million in 20 years’ time?A. $20,570.00B. $20,670.97C. $20,770.90D. $20,800.00Question 24 of 402.5/ 2.5 PointsNominal interest rates are the sum of two major components. These components are:A. the real interest rate and expected inflation.B. the risk-free rate and expected inflation.C. the real interest rate and default premium.D. the real interest rate and the T-bill rate.Question 25 of 402.5/ 2.5 PointsSuppose that over the life of the loan, the total interest expense for amonthly loan is $17,000, while the total interest payment for an annualloan is $19,000. Which of the below statements is FALSE?A. The difference reflects the reduction of the principal each month versusthe annual reduction of the principal.B. The more frequent the payment, the lower the total interest expense overthe life of the loan, even though the effective rate of the loan is higher.C. Reducing principal at a slower pace reduces the overall interest paid ona loan.D. Reducing principal at a slower pace increases the overall interest paidon a loan.Question 26 of 402.5/ 2.5 PointsWhat is the EAR if the APR is 5% and compounding is quarterly?A. Slightly above 5.09%B. Slightly below 5.09%C. Under 5%D. Over 5.25%Question 27 of 402.5/ 2.5 PointsThe phrase “price to rent money” is sometimes used to refer to:A. historical prices.B. compound rates.C. discount rates.D. interest rates.Question 28 of 402.5/ 2.5 PointsWhich of the following statements is true?A. By DECREASING the number of payments per year, you REDUCE your total cash outflow but INCREASE your effective borrowing rate.B. By INCREASING the number of payments per year, you BOOST your total cash outflow but INCREASE your effective borrowing rate.C. By INCREASING the number of payments per year, you REDUCE your total cash outflow but INCREASE your effective borrowing rate.D. By INCREASING the number of payments per year, you REDUCE your total cash outflow but DECREASE your effective borrowing rate.Question 29 of 402.5/ 2.5 PointsThe number of periods for a consumer loan (n) is equal to the:A. number of years times compounding periods per year.B. number of years.C. number of years in a period.D. number of compounding periods.Question 30 of 402.5/ 2.5 PointsThe frequency of default on a home loan is __________ the frequency of default on a credit card.A. much lower thanB. much higher thanC. a bit lower thanD. a bit higher thanQuestion 31 of 402.5/ 2.5 PointsWe can write the true relationship between the nominal interest rate and the real rate and expected inflation as which of the following?A. (1 + r) = (1 + r) × (1 + h*)B. r = (1 + r*) × (1 + h) – 1C. r* = (1 + r) × (1 + h) -1D. r = (1 + r*) × (1 + h) + 1Question 32 of 402.5/ 2.5 PointsWhich of the following statements is true if you increase your monthly payment above the required loan payment?A. The extra portion of the payment does not go to the principal.B. You can significantly increase the number of payments needed to pay off the loan.C. The extra portion of the payment increases the principal.D. You can significantly reduce the number of payments needed to pay off the loan.Question 33 of 402.5/ 2.5 PointsThe real rate is 2.5% and inflation is 3.25%. What is the approximate nominal rate?A. 5.75%B. 5.25%C. 3.25%D. 1.25%Question 34 of 402.5/ 2.5 PointsWhat is the EAR if the APR is 10.52% and compounding is daily?A. Slightly above 10.09%B. Slightly below 11.09%C. Slightly above 11.09%D. Over 11.25%Question 35 of 402.5/ 2.5 PointsSuppose you postpone consumption so that by investing at 8% you will have an extra $800 to spend in one year. Suppose that inflation is 4% during this time. What is the approximate real increase in your purchasing power?A. $800B. $600C. $400D. $200Question 36 of 402.5/ 2.5 PointsYou put down 20% on a home with a purchase price of $300,000. The down payment is thus $60,000, leaving a balance owed of $240,000. The bank will loan you the remaining balance at 4.28% APR. You will make annual payments with a 20-year payment schedule. What is the annual annuity payment under this schedule?A. $18,100.23B. $22,625.29C. $12,000.00D. $33,785.23Question 37 of 402.5/ 2.5 PointsWhich of the following statements is true?A. On many calculators the TVM key for interest is I/Y; this is Interest per Year, or the EAR rate.B. On many calculators the TVM key for interest is Y/I; this is Interest per Year, or the APR rate.C. On many calculators the TVM key for interest is I/Y; this is Interest per Year, or the APR rate.D. On many calculators the TVM key for a period is I/Y.Question 38 of 402.5/ 2.5 PointsWhen interest rates are stated or given for loan repayments, it is assumed that they are __________ unless specifically stated otherwise.A. daily ratesB. annual percentage ratesC. effective annual ratesD. APYsQuestion 39 of 402.5/ 2.5 PointsThe __________ compensates the investor for the additional risk that the loan will not be repaid in full.A. default premiumB. inflation premiumC. real rateD. interest rateQuestion 40 of 402.5/ 2.5 PointsSuppose you deposit money in a certificate of deposit (CD) at a bank. Which of the following statements is true?A. The bank is borrowing money from you without a promise to repay that money with interest.B. The bank is lending money to you with a promise to repay that money with interest.C. The bank is technically renting money from you with a promise to repay that money with interest.D. The bank is lending money to you, but not borrowing money from you.ashworth college BU340 Online Exam 7 latest 2016 march.784px;”=””>Part 1 of 2 – Lesson 6 Questions 37.5/ 50.0 PointsQuestion 1 of 402.5/ 2.5 PointsAs the rating of a bond increases (for example, from A, to AA, to AAA), it generally means that:A. the credit rating increases, the default risk increases, and the required rate of return decreases.B. the credit rating increases, the default risk decreases, and the required rate of return increases.C. the credit rating increases, the default risk decreases, and the required rate of return decreases.D. the credit rating decreases, the default risk decreases, and the required rate of return decreases.Question 2 of 402.5/ 2.5 PointsThe four steps to determining the price of a bond are:A. determine the amount and timing of the present cash flows, determine the appropriate discount rate, find the present value of the lump-sum principal and the annuity stream of coupons, and add the PVs of the principal and coupons.B. determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the future value of the lump-sum principal and the annuity stream of coupons, and add the FVs of the principal and coupons.C. determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the present value of the lump-sum principal and the annuity stream of coupons, and multiply the PVs of the principal and coupons.D. determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the present value