1. Which one of the following bonds has the most interest rate risk? A.3-year; 5 percent coupon B.3-year; 8 percent coupon C.10-year; 6 percent coupon D.30-year; 2 percent coupon E.30-year; 10 percent coupon

2. The bonds issued by Jake?s Dog Pampering have a 9 percent coupon, with semiannual payments. The bonds mature in 14 years and sell for $985. What is the yield to maturity?

3. Iguana Enterprises offers 4.25 percent coupon bonds making semiannual payments. They have a yield to maturity of 6.20 percent and the bonds are scheduled to mature in 6 years. If the face value is $1,000, what is the current market price of each bond?

4. Barnie?s Purple Dinosaurs issued 20 year 7 percent bonds, three years ago. The bonds currently sell in the market for $1025.82. If the face value of the bonds is $1,000, then what is the yield to maturity?

5. South Park Realty?s stock had a 10% gain last year. According to the Fed, inflation was 3% last year. Assuming you had invested in South Park Realty?s stock, what was your real rate of return?

6. Rocking Amp Bull energy DNA corp just paid a dividend of $3.10 a share last year. They have been increasing the dividends at a constant rate of 2.5% every year and plan on continuing to do so. If the market expects the total return on the stock to be 8% this year, what is the dividend yield?

7. Magic Wands plans on making a 10 year bond issuance to raise capital. The market currently requires a 7% yield to maturity on these bonds. To price the bonds at $1050, what coupon rate must Magic Wands offer?

8. You have found the following stock quote for Goofy Enterprises, Inc., in the financial pages of today's newspaper. The closing price for this stock that appeared inyesterday'spaper was $

9. Greenie?s Dog Traps is estimated to have a total return of 10%. Based on the following stock quote, what is the implied growth rate in dividends?

10. Signs R US Inc. has the following quote information in the financial section of today?s newspaper. What is the expected future dividend?

11. Table Top?s management is having a major data security problem. Someone deleted the depreciation expense number and they need it urgently. They provide you the following data:

Sales: 50,000 costs: 25,000 addition to Retained Earnings: 3,000 Dividends: 1,300 Interest Expense: 2200 Tax rate: 40% Depreciation expense: ???

The next two questions use the following information:

Alien Artillery, Inc. has current assets of $5,000, net fixed assets of $21,500, current liabilities of $3,600, and long-term debt of $7,200.

12. The value of the shareholders' equity account for this firm is $?

13. The amount of net working capital is $?

14. Orange Computers Inc issued 8% coupon bonds, with 7 years to maturity that make annual payments. The bonds were issued with a face value of $1000. If the yield to maturity for these bonds is 10%, what is the current yield?

15. Last year, Annie?s Counseling paid a dividend of $2.10. The dividend is expected to grow at 6%. If the investor?s required rate of return is 10%, what is the price of the stock today?

16. Which of the following is a non-cash expense?

1. EBIT
2. Depreciation
3. Accounts Receivable
4. Accounts Payable
5. COGS

17. A firm has Long-term debt of $4,200, total assets of $6,430, net working capital of $650 and fixed assets of $3,820. What is the amount of the total liabilities?

18. A firm has total liabilities of $8,200, current assets of $5,700, common stock of $6,300, paid-in surplus of $9,000, and net fixed assets of $21,500. What is the amount of the shareholders' equity?

19. The firm?s cash flow which is available to be distributed to the firm?s stockholders and creditors is defined as the:

A.Cash flow to creditors. B.Net capital spending. C.Cash flow from assets. D. Cash flow from operations. E.Cash flow to stockholders.

20. Papa Pizza Inc. has sales of $614,000, costs of $315,000, depreciation expense of $42,000, interest expense of $28,000, and a tax rate of 35 percent. If the firm has a 40% payout ratio, what is the addition to retained earnings $?

21. Which of the ratios listed below are used by management to measure a firm?s liquidity? I. Quick ratio II. Inventory Turnover ratio III. Equity Multiplier ratio IV Cash ratio

22. All else constant, a decrease in which of the following will increase the firm?s return on equity? I. Total equity II. Ebit III. Depreciation IV Sales

23. Which of the following is a measure of the firm?s capital structure?

I. Equity Multiplier II. Total Debt Ratio III Return on Assets IV Current Ratio

24. Based on the tax rate information below, if Capital Partners had $125,000 in pretax income, what would its tax liability be?

25. Happy Pills Inc has 5 year 7% bonds on the market which make semi-annual payments. If you desire a current yield of 8%, what is the most you are willing to pay for one of these bonds today?

26. Jake?s Greenie Traps is gaining market share and plans on paying the following dividends over the next few years before stabilizing growth: $2.00, $2.50, and $3.00. The plan is to then increase the dividend by 4% a year, indefinitely. Assuming investors require an 8% return on this stock, what is the value of one share today?

27. Which of the following accurately describes a premium bond?

A. Current yield

B. YTM

C. YTM > current yield > coupon rate

D. Current yield

E. Current yield > coupon rate > YTM

28. Assuming time to maturity is the same, which of the following apply to a zero coupon bond:

I. Has more interest rate risk than a high coupon bond

II. Has less interest rate risk than a high coupon bond

III. Has a higher yield to maturity than a high coupon bond

IV. Has a lower yield to maturity than a high coupon bond

Owl Tutoring Sample Test 2B Fin 3403 Barnhart Fall 2015 (updated) 1. Which one of the following bonds has the most interest rate risk? A. 3-year; 5 percent coupon B. 3-year; 8 percent coupon C. 10-year; 6 percent coupon D. 30-year; 2 percent coupon E. 30-year; 10 percent coupon 2. The bonds issued by Jake's Dog Pampering have a 9 percent coupon, with semiannual payments. The bonds mature in 14 years and sell for $985. What is the yield to maturity? 3. Iguana Enterprises offers 4.25 percent coupon bonds making semiannual payments. They have a yield to maturity of 6.20 percent and the bonds are scheduled to mature in 6 years. If the face value is $1,000, what is the current market price of each bond? 4. Barnie's Purple Dinosaurs issued 20 year 7 percent bonds, three years ago. The bonds currently sell in the market for $1025.82. If the face value of the bonds is $1,000, then what is the yield to maturity? 5. South Park Realty's stock had a 10% gain last year. According to the Fed, inflation was 3% last year. Assuming you had invested in South Park Realty's stock, what was your real rate of return? 6. Rocking Amp Bull energy DNA corp just paid a dividend of $3.10 a share last year. They have been increasing the dividends at a constant rate of 2.5% every year and plan on continuing to do so. If the market expects the total return on the stock to be 8% this year, what is the dividend yield? 7. Magic Wands plans on making a 10 year bond issuance to raise capital. The market currently requires a 7% yield to maturity on these bonds. To price the bonds at $1050, what coupon rate must Magic Wands offer? 8. You have found the following stock quote for Goofy Enterprises, Inc., in the financial pages of today's newspaper. The closing price for this stock that appeared in yesterday's paper was $ 52-WEEK HI LO 60.28 41.17 STOCK Goofy (DIV) 1.52 YLD % 3.1 PE 20 VOL 100s 18652 CLOSE ?? NET CHG -0.30 9. Greenie's Dog Traps is estimated to have a total return of 10%. Based on the following stock quote, what is the implied growth rate in dividends? 1 Owl Tutoring Inc. 2015 Owl Tutoring Sample Test 2B Fin 3403 Barnhart Fall 2015 (updated) 52-WEEK HI LO 50.18 42.27 STOCK GDT (DIV) 1.32 YLD % 6.1 PE 17 VOL 100s 9652 CLOSE 21.64 NET CHG +0.10 10. Signs R US Inc. has the following quote information in the financial section of today's newspaper. What is the expected future dividend? 52-WEEK HI LO 25.28 12.17 STOCK Goofy (DIV) ?? YLD % 3.1 PE 19 VOL 100s 18652 CLOSE 20.32 NET CHG -0.30 11. Table Top's management is having a major data security problem. Someone deleted the depreciation expense number and they need it urgently. They provide you the following data: Sales: 50,000 costs: 25,000 addition to Retained Earnings: 3,000 Dividends: 1,300 Interest Expense: 2200 Tax rate: 40% Depreciation expense: ??? The next two questions use the following information: Alien Artillery, Inc. has current assets of $5,000, net fixed assets of $21,500, current liabilities of $3,600, and long-term debt of $7,200. 12. The value of the shareholders' equity account for this firm is $? 13. The amount of net working capital is $? 14. Orange Computers Inc issued 8% coupon bonds, with 7 years to maturity that make annual payments. The bonds were issued with a face value of $1000. If the yield to maturity for these bonds is 10%, what is the current yield? 15. Last year, Annie's Counseling paid a dividend of $2.10. The dividend is expected to grow at 6%. If the investor's required rate of return is 10%, what is the price of the stock today? 16. Which of the following is a non-cash expense? A. EBIT B. Depreciation C. Accounts Receivable D. Accounts Payable 2 Owl Tutoring Inc. 2015 Owl Tutoring Sample Test 2B Fin 3403 Barnhart Fall 2015 (updated) E. COGS 17. A firm has Long-term debt of $4,200, total assets of $6,430, net working capital of $650 and fixed assets of $3,820. What is the amount of the total liabilities? 18. A firm has total liabilities of $8,200, current assets of $5,700, common stock of $6,300, paidin surplus of $9,000, and net fixed assets of $21,500. What is the amount of the shareholders' equity? 19. The firm's cash flow which is available to be distributed to the firm's stockholders and creditors is defined as the: A. Cash flow to creditors. B. Net capital spending. C. Cash flow from assets. D. Cash flow from operations. E. Cash flow to stockholders. 20. Papa Pizza Inc. has sales of $614,000, costs of $315,000, depreciation expense of $42,000, interest expense of $28,000, and a tax rate of 35 percent. If the firm has a 40% payout ratio, what is the addition to retained earnings $? 21. Which of the ratios listed below are used by management to measure a firm's liquidity? I. Quick ratio II. Inventory Turnover ratio III. Equity Multiplier ratio IV Cash ratio 22. All else constant, a decrease in which of the following will increase the firm's return on equity? I. Total equity II. Ebit III. Depreciation IV Sales 23. Which of the following is a measure of the firm's capital structure? I. Equity Multiplier II. Total Debt Ratio III Return on Assets IV Current Ratio 3 Owl Tutoring Inc. 2015 Owl Tutoring Sample Test 2B Fin 3403 Barnhart Fall 2015 (updated) 24. Based on the tax rate information below, if Capital Partners had $125,000 in pretax income, what would its tax liability be? Taxable Income 0 - 50,000 50,001 - 75,000 75,001 - 100,000 100,001 335,000 Tax Rate 15% 25% 34% 39% 25. Happy Pills Inc has 5 year 7% bonds on the market which make semi-annual payments. If you desire a current yield of 8%, what is the most you are willing to pay for one of these bonds today? 26. Jake's Greenie Traps is gaining market share and plans on paying the following dividends over the next few years before stabilizing growth: $2.00, $2.50, and $3.00. The plan is to then increase the dividend by 4% a year, indefinitely. Assuming investors require an 8% return on this stock, what is the value of one share today? 27. Which of the following accurately describes a premium bond? A. Current yield current yield > coupon rate D. Current yield coupon rate > YTM 28. Assuming time to maturity is the same, which of the following apply to a zero coupon bond: I. Has more interest rate risk than a high coupon bond II. Has less interest rate risk than a high coupon bond III. Has a higher yield to maturity than a high coupon bond IV. Has a lower yield to maturity than a high coupon bond 4 Owl Tutoring Inc. 2015