1. Your grandmother owns bonds that will mature in 8 years. The face value of these bonds is $1,000, and their coupon rate is 8%, with interest paid annually. Currently the yield to maturity is 13%. She bought these bonds one year ago at a price of $1,000, and just received her annual coupon interest payment. What is her holding period return on the bonds? (Use annual compounding.)

39.19% 15.99% 5.36% 1.60% 23.99%

2. Nevada Casinos, Inc. stock currently sells in the market for $74.00/share. It just paid a dividend of $6.00/share. Investors expect that the dividend will decline at a constant rate of 4% per year in the future. That is, the expected growth rate g is -4%. What rate of return do investors require on this stock?

4.43% 11.78% 4.11% 3.78% 12.43%

3. You saving up to buy a car that will cost $29,036.67 in four years, at time 4. You plan on making your first savings deposit one year from today, and then making an additional deposit in each of the following 3 years. These are the amounts you plan to save at the end of each year:

Year Projected Savings Amount 1 $6,000 2 $6,000 3 $6,000 4 $8,000

What rate will you need to earn to have enough in your savings account four years from now when you will buy the car?

a) 7.00% b) 8.00% c) 9.75% d) 6.40% e) 9.00%

4. A year ago, an investor purchased 500 shares of Ajax Inc. preferred stock at a price of $48.00/share. The firm has just paid its annual dividend of $1.1165. Now the share is priced at $55.82 in the market. What is the investor's return on this stock?

a) 2.33% b) 14.30% c) 18.63% d) 16.30% e) 14.02%