(Solution) 16. Alex Invested $10,500 In An Account That Pays 6 Percent Simple Interest. How Much Money Will He Have At The End Of Four Years? | Snapessays.com


(Solution) 16. Alex invested $10,500 in an account that pays 6 percent simple interest. How much money will he have at the end of four years?


16. Alex invested $10,500 in an account that pays 6 percent simple interest. How much money will he have at the end of four years? (Points : 4)

 

 

 

 

17. This morning, you borrowed $9,500 at 7.65 percent annual interest. You are to repay the loan principal plus all of the loan interest in one lump sum four years from today. How much will you have to repay? (Points : 4)

 

 

 

 

18. Which one of the following statements correctly states a relationship? (Points : 4)

 

Time and future values are inversely related, all else held constant.

 

Interest rates and time are positively related, all else held constant.

 

Time and present value are inversely related, all else held constant.

 

An increase in the discount rate increases the present value, given positive rates.

 

An increase in time increases the future value given a zero rate of interest.

 

 

 

19. How is an annual percentage rate calculated? (Points : 4)

 

 

 

 

20. Inflation has remained low for the past three years but you have come to the conclusion that trend is ending and inflation will increase significantly over the next 18 months. Assume you have reached this conclusion prior to other investors reaching the same conclusion. What adjustments should you make to your bond portfolio in light of your conclusions? (Points : 4)

 

 

 

 

21. The current yield is defined as the annual interest on a bond divided by which one of the following? (Points : 4)

 

coupon

 

face value

 

current market price

 

call price

 

dirty price

 

 

 

22. Which one of the following bonds is the least sensitive to interest rate risk? (Points : 4)

 

3-year; 4 percent coupon

 

3-year; 6 percent coupon

 

5-year; 6 percent coupon

 

7-year; 6 percent coupon

 

7-year; 4 percent coupon

 

 

 

 

23. Kelley wants to purchase shares in Classic Kars, Inc., but is torn between buying shares of common stock or shares of preferred stock. What should he consider before determining the type of share he should purchase? (Points : 4)

 

 

 

 

24. Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings? (Points : 4)

 

dual class

 

cumulative

 

non-cumulative

 

preferred

 

common

 

 

 

 

25. The dividend growth model:

 

 

I. assumes that dividends increase at a constant rate forever.

 

II. can be used to compute a stock price at any point in time.

 

III. can be used to value zero-growth stocks.

 

IV. requires the growth rate to be less than the required return.

 

(Points : 4)

 

I and III only

 

II and IV only

 

I, III, and IV only

 

I, II, and IV only

 

I, II, III, and IV

 


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This question was answered on: May 23, 2022

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