An annuity and an annuity due with the same number of payments have the same future
value if r = 10%. Which one has the higher payment?
A.An annuity and an annuity due cannot have the same future value.
B.There is no way to tell which has the higher payment.
C.The annuity due has the higher payment.
D.They both must have the same payment since the future values are the same.
E.The annuity has the higher payment.
Refer to Figure 14-2. What is the dividend payout ratio for Sudsy Soap?
Figure 14-2
Toni and Felix are considering buying stock. They would like to purchase 600 shares of
Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past
year:
NARREND
a.5.0
b.2.5
c.0.5
d.0.05
If your firm enters into an overnight reverse repurchase agreement, your firm is Enone
of the options
A.borrowing Fed funds temporarily.
B.selling a security now while agreeing to buy it back tomorrow.
C.giving an unsecured loan to the counterparty.
D.procuring a banker’s acceptance.
An umbrella liability policy provides
a.flood insurance.
b.additional liability protection over and above your auto insurance limits, only.
c.additional liability protection over and above your homeowner€s insurance limits,
only.
d.additional liability protection over and above any other liability insurance you carry.
Depending on their level of income, low- and moderate-income taxpayers can claim a
maximum nonrefundable ____ retirement savings contribution credit.
a.$500
b.$1,000
c.$3,650
d.15 percent
____ is the time in life when the major of income changes from earned income to
investments, Social Security benefits and part-time work.
a.Retirement
b.Age 65
c.Empty nest
d.Disability
A homeowner can obtain a $250,000, 30-year fixed-rate mortgage at a rate of 6.0
percent with zero points or at a rate of 5.5 percent with 2.25 points. If you will keep the
mortgage for 30 years, what is the net present value of paying the points (to the nearest
dollar)?
A.$9,475
B.$8,360
C.$7,564
D.$7,222
E.$6,578
____ life insurance policies possess the greatest investment risk to the policyholder.
a. Variable-universal
b. Term
c. Whole
d. Endowment
The discount yield on a T-bill differs from the T-bill’s bond equivalent yield (BEY)
because
I. the discount yield is the return per dollar of face value and the BEY is a return per
dollar originally invested.
II. a 360-day year is used on the discount yield and the BEY uses 365 days.
III. the discount yield is calculated without compounding, and the BEY is calculated
with compounding.
A.I only
B.II only
C.I and II only
D.II and III only
E.I, II, and III
Which of the following bond terms are generally positively related to bond price
volatility?
I. Coupon rate
II. Maturity
III. YTM
IV. Payment frequency
A.II and IV only
B.I and III only
C.II and III only
D.II only
E.II, III, and IV only