Which one of the following statements is correct concerning this investment? Linda will receive equal interest payments every six months over the life of the investment. Linda would have earned more interest if she had invested in an account paying 6. 50 percent simple interest. Linda will earn more interest in year 5 than she will in year 4. Linda would have earned more interest if she had invested in an account paying annual interest. Linda will earn less and less interest each year over the life of the investment. 11. (TCO 3) Mr. Smith will receive $7,500 a year for the next 14 years from his trust.
If the interest rate on this investment is eight percent, what is the approximate current value of these future payments? $61,800 $53,500 $113,400 $97,200 12. (TCO 3) Paper Pro recently purchased a printing machine costing $97,000. The company financed this purchase at 8. 25 percent interest, with monthly payments of $2,379. 45. How many years will it take the firm to pay off this debt? 3. 0 years 4. 0 years 4. 25 years 4. 5 years 5. 0 years 13. (TCO 3) Fine Oak Woodworks is considering a project that has cash flows of $5,000, $3,000, and $8,000 for the next three years.
North Bank offers you an APR of 13. 7 percent compounded monthly, and South Bank offers you an effective rate of 13. 75 percent on a business loan. Which bank should you choose and why? South Bank because its effective rate is higher. North Bank because the APR is lower. South Bank because its effective rate is lower. North Bank because its effective rate is lower. | Bottom of Form 1. (TCO 3) Tim needs to borrow $5,000 for two years. The loan will be repaid in one lump sum at the end of the loan term. Which one of the following interest rates is best for Tim? 7. 5 percent simple interest 7. 5 percent interest, compounded monthly . 0 percent simple interest 8. 0 percent interest, compounded annually 8. 0 percent interest, compounded monthly 2. (TCO 3) The difference between an ordinary annuity and an annuity due is the: number of payments to be made amount to be paid each time the timing of the payments frequency of the payments interest rate applied to the first payment 3. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 11 percent? Assume annual payments. $1080 $1085 $925 1000 4. (TCO 6 and 8) A bond’s debenture will include which of the following? description of any loan collateral call provisions total amount of the bond issue protective covenants all of the above none of the above 5. (TCO 3) Bonds issued by Blue Sky Airlines have a face value of $1,000 and currently sell for $1,180. The annual coupon payments are $125. If the bonds have 20 years until maturity, what is the approximate YTM of the bonds? 10. 50% 11. 50% 11. 75% 12% 6. (TCO 3) Bean Coffee issued preferred stock many years ago. It carries a dividend of $8 per share, fixed.
The Essay on It Goes Without Saying That Interest Rates Influence Our Decisions
It goes without saying, that interest rates influence our decisions, and affect many activities in our lives. Interest rates can be expressed as a percentage of the amount borrowed or saved. People always try to be well-informed about changes in economy and finance. They say that it helps them to make better decisions about their personal finance. It is evident that interest rates affected the ...
As time has passed, yields have decreased from the original eight percent (at the time of issuance) to six percent. What was the current price of the stock? Hint: Yield is the same as required rate of return. $100 $133 $102 $86. 40 None of the above 7. (TCO 3) Intelligence Research, Inc. will pay a common stock dividend of $1. 60 at the end of the year. The required rate of return by common stockholders is 13 percent. The firm has a constant growth rate of 7. 5 percent. What is the current price of the stock? $23 $32 $27 $29 8. (TCO 3) Royal Electric paid a $4 dividend last year.
The Essay on Kate Chopin 4
Who comes to mind when the term “American author” is mentioned? A lot of female authors of today would say Kate Chopin, one of the most independent writers of the nineteenth century. Although Kate Chopin didn’t live to see her work re-published, she is an important author to study because her stories are influential, her ambition arouses her readers, and her point of view supports independent ...
The dividend is expected to grow at a constant rate of six percent over the next four years. Common stockholders require a 13 percent return. What are the values of the dividends for years 1, 2 and 3, respectively? $4, $4. 5 and $4. 8 $4. 24, $4. 76 and $5. 05 $4. 24, $4. 49, $4. 76 $4, $4. 50, $5. 05 9. (TCO 6) The market where one shareholder sells shares to another shareholder is called the _____ market. primary main secondary principal dealer 10. (TCO 6) A member of the NYSE who trades on the floor of the exchange for his or her personal account is called a(n): specialist. ndependent broker. floor trader. stand-alone agent. dealer. 11. (TCO 6) The annual interest on a bond divided by the bond’s market price is called the: yield to maturity. yield to call. total yield. required yield. current yield. 12. (TCO 6) A sinking fund is an account managed by a bond trustee for the sole purpose of: paying interest payments on a semi-annual basis. redeeming bonds early. repaying the face value at maturity. paying the expenses required to reissue outstanding bonds. paying the “balloon payment” at maturity. 13. (TCO 8) Which of the following is true regarding bonds?
Most bonds do not carry default risk. Municipal bonds are free of default risk. Bonds are not sensitive to changes in the interest rates. Moody’s and Standard and Poor’s provide information regarding a bond’s interest rate risk. None of the above is true 14. (TCO 6) Which of the following best describes a floating-rate bond? A bond that adjusts the coupon payments based on an interest rate index, such as the T-bill. A bond that is issued by the U. S. government. A bond that adjusts the coupon payment date. A bond that has no coupons, but adjusts the face value payment based on inflation. 5. (TCO 6) Which of the following is true regarding convertible bonds? Select all that apply: Are relatively common Can be exchanged for a fixed number of shares at maturity only Can be exchanged for a fixed number of shares before maturity Allow the holder to require the issuer to buy the bond back Kate is the owner of Kate’s Sun Wear, which is a sole proprietorship. Kate unexpectedly suffered a fatal heart attack. Which one of the following statements is correct given this situation?
The Term Paper on Interest Rate Bonds Bond Rating
Bonds Given today's uncertain economy, many people are taking time to examine various options for their financial future. Different types of investments are investigated and bonds are one of the more popular choices considered. Many of the same people who talk about investing in bonds, however, do not fully understand them nor where they place in the economy. Many individuals believe that they ...
The proprietorship ended when Kate passed away. Kate’s Sun Wear will continue on with Kate’s beneficiary automatically replacing Kate as the sole proprietor. The proprietorship ends when Kate passed on, and all income to that date will be tax-free. The proprietorship ends when Kate passed on, and all income to that date will be taxed as a separate legal entity. The proprietorship ends when Kate passed on, and all income earned to that date will be taxed as Kate’s personal income. 2. (TCO 1) Which one of the following is classified as a current asset? land accounts payable equipment inventory note payable 3. TCO 1) Can you provide some examples of recent, well-known unethical behavior cases? Explain the situation in one or two sentences. 4. (TCO 3) How can we apply the concept of time value of money in evaluating a mortgage? Present at least two scenarios. Briefly explain your rationale. 5. (TCO 8) Why do firms use protective covenants? Provide two or three examples of protective covenants, and explain how these covenants increase or decrease risk. 6. (TCO 6) What are some of the features of zero-coupon bonds that make them attractive to certain investors? Which type of investors will be most interested in these bonds? | Bottom of Form
