1. A 6.25 percent coupon bond with 20 years left to maturity is offered for sale at $1017.20. What yield to maturity is the bond offering? (Assume interest payments are paid semi-annually.) A. 3.05% B. 6.00% C. 6.10% D. 6.25% E. None of the above

2. A 7.25 percent coupon bond with 25 years left to maturity can be called in 5 years. The call premium is one year of coupon payments (it means call price is $1072.50 - par value plus one year of interest payment). It is offered for sale at $1066.24. What yield to call of the bond? (Assume that interest payments are paid semi-annually.) A. 3.41% B. 3.45% C. 3.51% D. 6.90% E. None of the above

3. A company has a beta of 0.75. If the market return is expected to be 16 percent and the risk-free rate is 6 percent, what is the company's required return? A. 12.0% B. 13.5% C. 14.5% D. 18.0% E. None of the above

4. A company is analyzing two mutually exclusive projects, E and F, whose cash flows are shown below: Years 0 1 2 3 4 Cash Flow E -$1,100 $900 $350 $50 $10 Cash Flow F -$1,100 $0 $300 $400 $850 The company's cost of capital is 12 percent, and it can get an unlimited amount of capital at that cost. What is the regular IRR (not MIRR) of the better project? (Hint: Note that the better project may or may not be the one with the higher IRR.) A. 12.53% B. 17.46% C. 13.88% 2 D. 13.09% E. 12.00%

5. A corporate bond with a 5.75 percent coupon has 15 years left to maturity. It has had a credit rating of BB and a yield to maturity of 6.25 percent. The firm has recently gotten more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 6.00 percent. What will be the change in the bond's price in dollars? (Assume interest payments are paid semi-annually.) A. decrease $22.25 B. increase $22.25 C. decrease $23.72 D. increase $23.72 E. None of the above

6. A fast-growing firm recently paid a dividend of $0.50 per share. The dividend is expected to increase at a 25 percent rate for the next 3 years. Afterwards, a more stable 12 percent growth rate can be assumed. If a 15 percent discount rate is appropriate for this stock, what is its value today? A. $5.00 B. $22.62 C. $25.75 D. $36.46 E. None of the above

7. A firm is expected to pay a dividend of $3.00 next year and $3.21 the following year. Financial Analysts believe the stock will be at their target price of $80.00 in two years. Compute the value of this stock today if the required return is 13 percent. A. $50.00 B. $67.52 C. $67.82 D. $86.21 E. None of the above

8. A loss incurred by a corporation A. Must be carried forward unless the company has had 2 loss years in a row. B. Can be carried back 2 years, then carried forward up to 20 years following the loss. C. Can be carried back 5 years and forward 3 years. D. Cannot be used to reduce taxes in other years except with special permission from the IRS. E. Can be carried back 3 years or forward 10 years, whichever is more advantageous to them.

9. A measure of "risk per unit of expected return." is A. standard deviation 3 B. coefficient of variation C. correlation coefficient D. beta E. None of the above

10. A project costing $20,000 generates cash inflows of $9,000 annually for the first three years, followed by cash outflows of $1,000 annually for two years. At most, this project has ______ different IRR(s). Hint: This is a multiple IRR question. A. one B. two C. three D. five E. None of the above