Exam2 FIN370 B Key
2. Which one of the following statements is correct?
A. The future value of an annuity is unaffected by the amount of each annuity payment.
B. The present value of an annuity is unaffected by the number of the annuity payments.
C. The present value of an annuity increases when the interest rate decreases.
D. The present value of an annuity increases when the interest rate increases.
E. The future value of an annuity increases when the interest rate decreases. 4. A debenture is:
A. long-term debt secured by fixed assets of the borrower.
B. unsecured debt that generally matures in less than ten years.
C. unsecured debt that generally matures in ten years or more.
D. long-term debt secured by real estate.
E. any type of debt that is short-term in nature.
5. Which one of the following is a form of bond issue wherein interest payments are made directly to the owners of record?
A. coupon
B. street name
C. bearer
D. registered
E. secured 6. A real rate of return has been adjusted for:
A. market risk.
B. taxes.
C. interest rate risk.
D. inflation. 8. The 7 percent semiannual coupon bonds of the Garden Supplies Co. are selling for
$976, have a face value of $1,000, and have a yield to maturity of 8.079 percent. How many years will it be until these bonds mature?
A. 5.00 years
B. 3.15 years
C. 10.00 years
D. 7.85 years
E. 2.50 years 9. Sky Investments offers an annuity due with semi-annual payments for 10 years at 7 percent interest. The annuity costs $90,000 today. What is the amount of each annuity payment?
A. $8,495.36
B. $7,939.59
C. $7,210.64
D. $6,118.35
E. $6,332.50 10. Bluff Enterprises has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 6 years, and have a 7 percent coupon. The current price is quoted at 101.36. What is the yield to maturity?
A. 6.86 percent
B. 6.49 percent
C. 5.97 percent
D. 6.72 percent
E. 7.11 percent 14. The yield to maturity on a bond is:
A. another name for the coupon rate.
B.
A. The future value of an annuity is unaffected by the amount of each annuity payment.
B. The present value of an annuity is unaffected by the number of the annuity payments.
C. The present value of an annuity increases when the interest rate decreases.
D. The present value of an annuity increases when the interest rate increases.
E. The future value of an annuity increases when the interest rate decreases. 4. A debenture is:
A. long-term debt secured by fixed assets of the borrower.
B. unsecured debt that generally matures in less than ten years.
C. unsecured debt that generally matures in ten years or more.
D. long-term debt secured by real estate.
E. any type of debt that is short-term in nature.
5. Which one of the following is a form of bond issue wherein interest payments are made directly to the owners of record?
A. coupon
B. street name
C. bearer
D. registered
E. secured 6. A real rate of return has been adjusted for:
A. market risk.
B. taxes.
C. interest rate risk.
D. inflation. 8. The 7 percent semiannual coupon bonds of the Garden Supplies Co. are selling for
$976, have a face value of $1,000, and have a yield to maturity of 8.079 percent. How many years will it be until these bonds mature?
A. 5.00 years
B. 3.15 years
C. 10.00 years
D. 7.85 years
E. 2.50 years 9. Sky Investments offers an annuity due with semi-annual payments for 10 years at 7 percent interest. The annuity costs $90,000 today. What is the amount of each annuity payment?
A. $8,495.36
B. $7,939.59
C. $7,210.64
D. $6,118.35
E. $6,332.50 10. Bluff Enterprises has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 6 years, and have a 7 percent coupon. The current price is quoted at 101.36. What is the yield to maturity?
A. 6.86 percent
B. 6.49 percent
C. 5.97 percent
D. 6.72 percent
E. 7.11 percent 14. The yield to maturity on a bond is:
A. another name for the coupon rate.
B.