1.If you would like to put $3,600 (annually) in 401K generating 8% of APR, how much you will have at the end of 20 years?

Ans: $164,743.07

2.If you would like to put $300 (monthly) in 401K generating 8% of APR, how much you will have at the end of 20 years?

Ans: $176,706.12

3.If you plan to buy a house priced at $700,000 in 5 years, how much you need to deposit per year in a saving account promising 6% of APR?

Ans: $124,177.48

4.If you plan to buy a house priced at $700,000 in 5 years, how much you need to deposit per month in a saving account promising 6% of APR?

Ans: $10,032.96

5.You would like to buy out one small business which generating annual free cash flows of $100,000. If you believe the business will go on for the next 10 years and have zero salvage value, how much is the price of the business? Here we assume 6% APR.

Ans: $736,008.71

6.You have an investment opportunity giving you $5000 at the end of each year for 6 years, if you invest $20,000 now. What is your annual percentage return?

Ans: 12.98%

7.You borrow $30,000 for 4 years under an amortized loan plan. Its interest rate is 7% APR. How much the principal amount is left at the end of 2^nd year?

Ans: Annual Payment is $8,856.84. Balance at the end of 2^nd year: $16,013.34

8.You have a bond with 4 years maturity and 6% coupon (interest) rate. A coupon is paid annually. Its face value is $1000. If a Yield to Maturity is 10%, how much is the bond price?

Ans: $873.21

9.You have a bond with 5 years maturity and 6% coupon (interest) rate. A coupon is paid annually. Its face value is $1000. If the bond is priced at $980, how much is the Yield to Maturity?

Ans: 6.48%

10.You have a bond with 6 years maturity. A coupon is paid annually. Its face value is $1000. If the bond is priced at $990 and YTM is 7%, how much is coupon payment or rate?

Ans: $67.90 (6.79%).

11.You have a bond with 6 years maturity and 6% coupon (interest) rate. A coupon is paid annually. Its face value is $1000. The bond is priced at $980. This bond carries call provision in which a bond can be called back by an issuer in three years and a call price is $1100. How much is Yield to Call if called back in three years?

Ans: 9.83%

12.Calculate return and risk (standard deviation) of a portfolio composed of Stock A and Stock B. Weight for Stock A is 40%. Weight for Stock B is 60%.

	Stock A	Stock B
2021	0.1	-0.2
2022	0.2	0
2023	0.6	0.5

Ans: Return is 18.00%. Standard Deviation is 32.19%.

13.Calculate correlation coefficient of Stock A and Stock B.

	Stock A	Stock B
2021	0.1	-0.2
2022	0.2	0
2023	0.6	0.5

Ans: 99.59%

14.Stock C has a beta of 1.3. S&P 500 offers an annual return of 12%. Yield to Maturity of 10 years T bond is 4%. What is an expected return from CAPM?

Ans: 0.144

15.If CAPM estimate an expected return of Stock K is 14.4% but an actual return is 10%, does it mean Stock K is currently overpriced?

Ans: Yes.

16.You form a portfolio composed of Stock K and L. Stock K has a beta of 2. Stock L has a beta of 1.2. You put 30% of your money on Stock K and 70% on Stock L. How much is a beta of your portfolio?

Ans: 1.44