1. What is the current value of a share of common stock that is expected to pay a dividend of $3.95 this coming year. In addition, they expect constant growth of 5% forever after. The required rate of return is 8% a $138.25 b. $125.40 c. $131.67 d. $143.64 2. Which of the following capital budgeting tools do not incorporate the time value of money? a Payback Period b. Internal Rate of Return c. Profitability Index d. Net Present Value a. I only b. I and III only c. L II and III only d. L. II, III, and IV 3. Suppose you have expected Net Cash Flows (NCFs) of $600,000 for each of the 15 years of the project. The NPV is $1.228M. Given a required return on the project of 5%, what is the NINV on the project? a $6M b. SSM c. $4M d. $3M 4. A bond is selling for $978 and was originally issued with a face value of $1,000. Given this, which of the following statements is incorrect? a. The YTM has increased. b. The bond is selling at a discount. c. The coupon rate as decreased. d. The bond's coupon rate is less than its YTM. 5. Which of the following is an accurate statement of the difference between brokers and dealers? a. A dealer holds an inventory of assets to trade from if need be, while brokers do not. b. Brokers are financial intermediaries both online and in person, while dealers only operate online. e. Dealers make their money through transaction fees, while brokers make theirs on a bid- ask spread. d. Brokers were historically known as market makers, while dealers were historically known as market buyers. 6. What is the current price of a coupon bond that was issued 15 years ago, and has 10 years left until maturity. The currently YTM is 6.9% and the bond pays a coupon payment of $32 each six months, based upon a face value of $1,000. a $953.73 b. $1,421.17 c. $946.62 d. $964.31 7. Which of the following statements is correct regarding credit ratings? a A bond with a Crating means a bond is safer than a BBB rating b. A bond with a B rating is investment grade. c. The highest bond rating is a AA. d. A bond rated Ba is speculative grade. 8. Consider a project with expected net cash flows of $23,500 for each of the project's 5 years. The NINV is $100,000 and the required return is 10%. Given this, what is the profitability index of the project? a. 96 b. 1.06 C. 89 d. 1.175