1- How much would $1, growing at 3.5% per year, be worth after 75 years?
a. $12.54
b. $13.20
c. $13.86
d. $14.55
e. $15.28
b
4 - The Morrissey Company's bonds mature in 7 years, have a par value of
$1,000, and make an annual coupon payment of $70. The market interest
rate for the bonds is 8.5%. What is the bond's price?
a. $923.22
b. $946.30
m
c. $969.96
er as
d. $994.21
co
e. $1,019.06
eH w
o.
A
rs e
ou urc
7 - One problem with ratio analysis is that relationships can be
manipulated. For example, if our current ratio is greater than 1.5,
then borrowing on a short-term basis and using the funds to build up our
cash account would cause the current ratio to increase.
o
aC s
a. True
vi y re
b. False
B
ed d
ar stu
10 - If the discount (or interest) rate is positive, the future value of an
expected series of payments will always exceed the present value of the
same series.
sh is
a. True
Th
b. False
a
13 - Last year Tempe Corporation's sales were $525 million. If sales grow at
7.5% per year, how large (in millions) will they be 8 years later?
a. $845.03
b. $889.51
c. $936.33
https://www.coursehero.com/file/7868622/Sample-midterm-1/
d. $983.14
e. $1,032.30
7 - Which of the following investments would have the lowest present value?
Assume that the effective annual rate for all investments is the same
and is greater than zero.
a. Investment A pays $250 at the end of every year for the next 10
years (a total of 10 payments).
b. Investment B pays $125 at the end of every 6-month period for the
next 10 years (a total of 20 payments).
c. Investment C pays $125 at the beginning of every 6-month period for
the next 10 years (a total of 20 payments).
d. Investment D pays $2,500 at the end of 10 years (just one payment).
e. Investment E pays $250 at the beginning of every year for the next
m
10 years (a total of 10 payments).
er as
co
eH w
9 - Jose now has $500. How much would he have after 6 years if he leaves it
o.
invested at 5.5% with annual compounding?
rs e
ou urc
a. $591.09
b. $622.20
c. $654.95
o
d. $689.42
e. $723.89
aC s
vi y re
22 - Last year Tempe Corporation's sales were $525 million. If sales grow
at 7.5% per year, how large (in millions) will they be 8 years later?
a. $845.03
ed d
b. $889.51
ar stu
c. $936.33
d. $983.14
e. $1,032.30
sh is
32 - Which of the following would indicate an improvement in a company’s
Th
financial position, holding other things constant?
a. The inventory and total assets turnover ratios both decline.
b. The debt ratio increases.
c. The profit margin declines.
d. The EBITDA coverage ratio declines.
e. The current and quick ratios both increase.
34 - Branch Corp.'s total assets at the end of last year were $315,000 and its
net income after taxes was $22,750. What was its return on total assets?
a. 7.22%
https://www.coursehero.com/file/7868622/Sample-midterm-1/
b. 7.58%
c. 7.96%
d. 8.36%
e. 8.78%
25 - Suppose you have $1,500 and plan to purchase a 5-year certificate of
deposit (CD) that pays 3.5% interest, compounded annually. How much
will you have when the CD matures?
m
er as
a. $1,781.53
co
b. $1,870.61
eH w
c. $1,964.14
d. $2,062.34
o.
e. $2,165.46
rs e
ou urc
39 - You want to buy a new ski boat 2 years from now, and you plan to save
$8,200 per year, beginning one year from today. You will deposit your
savings in an account that pays 6.2% interest. How much will you have
o
just after you make the 2nd deposit, 2 years from now?
aC s
a. $15,260
vi y re
b. $16,063
c. $16,908
d. $17,754
e. $18,642
ed d
ar stu
40 - D. J. Masson Inc. recently issued noncallable bonds that mature in 10
years. They have a par value of $1,000 and an annual coupon of 5.5%.
If the current market interest rate is 7.0%, at what price should the
bonds sell?
sh is
Th
a. $829.21
b. $850.47
c. $872.28
d. $894.65
e. $917.01
41 - The Morrissey Company's bonds mature in 7 years, have a par value of
$1,000, and make an annual coupon payment of $70. The market interest rate
for the bonds is 8.5%. What is the bond's price?
a. $923.22
b. $946.30
https://www.coursehero.com/file/7868622/Sample-midterm-1/
c. $969.96
d. $994.21
e. $1,019.06
16 - The income statement shows the difference between a firm's income and
its costs--i.e., its profits--during a specified period of time. However,
not all reported income comes in the form or cash, and reported costs
likewise may not correctly reflect cash outlays. Therefore, there may be a
substantial difference between a firm's reported profits and its actual cash
flow for the same period.
a. True
b. False
m
er as
co
eH w
o.
42- Which of the following statements is CORRECT?
rs e
ou urc
a. You hold two bonds. One is a 10-year, zero coupon, issue and the
other is a 10-year bond that pays a 6% annual coupon. The same market
rate, 6%, applies to both bonds. If the market rate rises from the
current level, the zero coupon bond will experience the larger
o
percentage decline.
aC s
b. The time to maturity does not affect the change in the value of a
vi y re
bond in response to a given change in interest rates.
c. You hold two bonds. One is a 10-year, zero coupon, bond and the other
is a 10-year bond that pays a 6% annual coupon. The same market rate,
6%, applies to both bonds. If the market rate rises from the current
level, the zero coupon bond will experience the smaller percentage
ed d
decline.
ar stu
d. The shorter the time to maturity, the greater the change in the
value of a bond in response to a given change in interest rates.
e. The longer the time to maturity, the smaller the change in the
value of a bond in response to a given change in interest rates.
sh is
Th
37 - Suppose the U.S. Treasury offers to sell you a bond for $3,000. No
payments will be made until the bond matures 10 years from now, at
which time it will be redeemed for $5,000. What interest rate would
you earn if you bought this bond at the offer price?
a. 3.82%
b. 4.25%
c. 4.72%
d. 5.24%
e. 5.77%
https://www.coursehero.com/file/7868622/Sample-midterm-1/
Powered by TCPDF (www.tcpdf.org)
