# Business account 1 - 74347

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## johnnyboy123

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• Due on: Thu 11 Sep, 2014 (04:16pm)
• Asked on: Thu 11 Sep, 2014
• Due date has passed, but you can still Post Solution.
Description

What is the present value of \$3,000, discounted at 8 percent

the nearest cent.)

A. \$2,777.78 C. \$3,499.20

B. \$2,572.02 D. \$3,240.00

2. The stated interest payment made on a bond is called the

A. yield to maturity. C. face value.

B. maturity. D. coupon.

3. An ordinary annuity of \$500 per period, discounted at a rate

of 8 percent per period for 3 periods, has a present value of

\$1,288.55. If this same annuity was an annuity due, what

nearest cent.)

A. \$1,288.55 C. \$1,391.63

B. \$1,500.00 D. \$1,788.55

4. The relationship between real returns, nominal returns, and inflation is commonly

referred to as the

A. dirty price. C. Treasury yield curve.

5. On an investment of \$2,000, you’ll earn 10 percent interest per year compounded

semiannually. What is the future value of this investment after one year?

A. \$2,205 C. \$2,420

B. \$2,100 D. \$4,500

6. What is the future value of a \$10,000 investment, earning 12 percent interest

per period, after three periods? (Round your answer to the nearest cent.)

A. \$7,117.80 C. \$12,544.00

B. \$11,200.00 D. \$14,049.28

7. Where does most bond trading occur?

A. At the corporate headquarters of Moody’s

B. In the New York Stock Exchange (NYSE)

C. Electronically, over the counter

D. At the corporate headquarters of Standard and Poor’s

8. Suppose that you buy a \$5,000 bond with a 12 percent annual coupon, payable

semiannually on January 1 and July 1. On both January 1 and July 1, the bondholder

will receive \$300, for a total annual interest payment of \$600 (\$300 + \$300).

Based on the principal and accrued interest only, how much would you expect

A. \$5,200 C. \$5,300

B. \$5,000 D. \$5,600

9. Today, you deposit \$1,000 into an account that pays 12 percent interest annually.

How much will you have in the account after 4 years? (Round your answer to the

nearest cent.)

A. \$635.52 C. \$1,120.00

B. \$1,254.40 D. \$1,573.52

10. A type of loan that’s paid off by making regular principal reductions, usually according

to a specified schedule, is called a(n)

A. annuity due. C. amortizing loan.

B. debenture. D. corporate bond.69

11. What is the present value of the right to receive four equal payments (ordinary

annuity) of \$500 per period, discounted at a rate of 10 percent per period? (Round

A. \$341.51 C. \$1,584.94

B. \$454.55 D. \$732.05

12. On an initial investment of \$1,000, you can earn 12 percent interest per year

compounded annually, or 12 percent interest per year compounded semiannually.

Which of the following statements is correct?

A. 12 percent per year, compounded annually, is the better interest rate for

the investment.

B. 12 percent per year, compounded semiannually, is the better interest rate

for the investment.

C. There’s no difference between the two interest rates; both rates will produce

the same future value.

D. It isn’t possible to determine the future value of this investment based on

the information provided.

13. The payments made by a corporation to shareholders, either in cash or in stock,

are called

A. dividends. C. cash flows.

B. capital gains. D. bond yields.

14. What is the future value of a \$1,500 investment, earning 10 percent interest

per period, after two periods? (Round your answer to the nearest cent.)

A. \$1,650.00 C. \$1,815.00

B. \$1,363.63 D. \$1,239.67

15. A stock’s expected cash dividend divided by its current price is called the

A. dividend yield. C. constant growth.

B. capital gains yield. D. ask price.

16. Today, you deposit \$6,000 into an account that pays 10 percent annually. In one

year, you’ll deposit another \$4,000 in the account. How much will you have in the

account after two years?

A. \$10,600 C. \$10,000

B. \$11,660 D. \$11,000

17. What is the present value of \$2,200, discounted at 10 percent interest per period,

A. \$2,420.00 C. \$1,818.18

B. \$2,000.00 D. \$1,980.00

70

A. The NASDAQ is a computer network, with no physical location for trading.

B. The number of NYSE exchange members is unlimited.

C. The NASDAQ uses a specialist system for actively traded stocks.

D. The NYSE does not have a physical location for stock trading activities.

19. You want to invest money for 3 years in an account that pays 7 percent interest

annually. How much would you need to invest today to reach a future goal of \$5,000?

A. \$4,650.00 C. \$4,762.90

B. \$6,125.22 D. \$4,081.49

20. What is the present value of the right to receive four equal payments (annuity due)

of \$1,000 per period, discounted at a rate of 10 percent per period? (Round your

A. \$1,909.09 C. \$1,464.10

B. \$3,486.85 D. \$2,486.85

2 Solution for Business account 1
Title Price Category solution By purchased
\$15.00 no category cinedine2 0 time(s)
\$13.00 no category theprofessor 0 time(s)