1. Calculate the present value of an investment given the following information: (a) Years—20, (b) Rate—10%, and (c) Future Value—$20,000.
2. Calculate the future value of an investment given the following information: (a) Years—10, (b) Rate—5%, and (c) Present Value—$10,000.
3. Calculate the rate of return on an investment given the following information: (a) Years—25, (b) Present Value—$50,000, (c) Future Value—$400,000.
4. Calculate the number of years on an investment given the following information: (a) Present Value—$32,000, (b) Future Value—$165,000, and Rate—12%.
5. Calculate the present value of an annuity given the following information: (a) Years—10, (b) Payment—$15,000, and Rate—15%.
6. Calculate the future value of an annuity given the following information: (a) Years—25, (b) Payments--$25,000, and (c) Rate—4%.
7. Calculate the rate of return for the following annuity: (a) Present Value—$24,000, (b) Number of Years—10, Payments $2,600.
8. Calculate the present value of an ordinary annuity with the following characteristics: (a) Payment—$10,000, (b) Number of Years—10, and (c) Rate—10%.
9. Calculate the current price of a bond that has the following characteristic: (a) Coupon--$85, (b) Yield to Maturity—5%, and Number of Years—10.
10. Calculate the current price of a bond that pays semi-annual coupon payments and has the following characteristics: (a) Number of Years until maturity—20, (b) Annual Coupon Rate—4%, and (c) Yield to Maturity—5%.
11. Calculate the yield to maturity for a bond that has the following characteristics: (a) Coupon--$50, (b) Price--$1,080, and (c) Years until Maturity—20.
12. Calculate the price that you would be willing to pay for the following ‘no growth’ stock that has the following characteristics: (a) Annual Dividend--$2.50 and (b) Investor’s required rate of return—10%.
13. Calculate the price that you would be willing to pay for the following ‘constant growth’ stock that has the following characteristics: (a) Annual Dividend—$2.50, (b) Constant Growth Rate—8%, and (c) Investor’s required rate of return—10%.
14. A conflict of interest between the stockholders and management of a firm is called:
A. stockholders' liability.
B. corporate breakdown.
C. the agency problem.
D. corporate activism.
E. legal liability.
15. Annuities where the payments occur at the end of each time period are called _____, whereas _____ refer to annuity streams with payments occurring at the beginning of each time period.
A. ordinary annuities; early annuities
B. late annuities; straight annuities
C. straight annuities; late annuities
D. annuities due; ordinary annuities
E. ordinary annuities; annuities due
16. A bond with a face value of $1,000 that sells for $1,000 in the market is called a _____ bond.
A. par value
B. discount
C. premium
D. zero coupon
E. floating rate
17. All else constant, a bond will sell at _____ when the yield to maturity is _____ the coupon rate.
A. a premium; higher than
B. a premium; equal to
C. at par; higher than
D. at par; less than
E. a discount; higher than
18. A form of equity which receives no preferential treatment in either the payment of dividends or in bankruptcy distributions is called _____ stock.
A. dual class
B. cumulative
C. deferred
D. preferred
E. common