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1) virtually all finance jobs require:
a.teamwork
b.good communication skills
c.proficiency with computers
d.all of the above
e.both (a) and (c)
2) you are evaluating a perpetuity. the first payment is $100, and it arrives in one year.
each subsequent annual payment will increase by 10%. if the discount rate is 8%, what
is the present value of this perpetuity?
a.$5,500
b.$1,000
c.$1,250
d.the present value is infinite
3) narrbegin: smith credit line
smith enterprise credit line
smith enterprise has a one year credit line of $5,000,000 with second bank. on average
smith uses $3,250,000 of the credit line. second bank charges a .45% commitment fee
on the unused portion of the line and the interest rate is set at libor +1.5%. the bank also
requires a 5% compensating balance.
narrend
what is the most that smith can effectively borrow against the line without having to
deposit additional funds with the bank?
a.$5,000,000
b.$4,255,374
c.$4,586,408
d.$4,761,905
4) how much do you have to invest today at an annual rate of 8%, if you need to have
$5,000 six years from today?
a.$3,150.85
b.$4,236.75
c.$7,934.37
d.$2,938.48
5) a bond currently trades at $975 on the secondary market. the bond has 10 years until
maturity and pays an annual coupon at 9% of face value. the face value of the bond is
$1,000. what is the coupon yield for this bond?
a.8.86%
b.9.00%
c.9.23%
d.9.40%
6) you have the following data on the securities of three firms:
if the risk-free rate last year was 3%, and the return on the market was 11%, which firm
had the best performance on a risk-adjusted basis?
a.firm a
b.firm b
c.firm c
d.there is no difference in performance on a risk-adjusted basis
7) which of the following had a significant impact on the change that the venture capital
industry went through in the early 1970s?
a.the lowered top personal tax rate on capital gains from 35% to 28%
b.the adoption of the prudent man rulein 1979
c.the restructuring of the economy in 1975
d.a and b
8) banana split co. has had six 2-for 1 splits since you purchased one share for $2 seven
years ago. if the current price per share is $20, what it the value of your investment?
a.$2,560
b.$1,280
c.$640
d.none of the above
9) you checked the $/ exchange rate a week ago and you found that one euro cost you
$1.2432. when you checked the $/ exchange rate again yesterday one euro was trading
at $1.2343. by how much did the value of the u.s dollar appreciate (depreciate)?
a.depreciated by 0.72%
b.appreciated by 0.72%
c.depreciated by 1.24%
d.appreciated by 1.24%
10) emma incorporated expects non-normal dividend growth over the next three years;
that is a 0% growth rate in the first year, then 25%, and then 12% followed by growth
of 8% thereafter. if the last dividend paid was $2.50 and the appropriate discount rate is
12%; what is the price of the stock today?
a.$67.26
b.$94.50
c.$76.64
d.$74.24
11) a project under consideration for a firm has several possible outcomes shown in the
table below. given the assumptions below, what is the expected npv for the project?
a.-$8.00
b.-$2.50
c.$1.20
d.$1.40
12) narrbegin: exhibit 17-1
exhibit 23-1
s&p 500 index; $250 index may 2004
narrend
refer to exhibit 23-1. for the purpose of marking to market what is the current value of
the december contract?
a.$262,850.00
b.$264,837.50
c.$265,550.00
d.$238,250.00
13) you are looking up bond prices in the newspaper and you find the following quote
for a $1,000 face value treasury bond: 103:26. what is the price of this bond?
a.$103.26
b.$1,038.13
c.$1,032.60
d.$1,000
