20. Calculate the EAR of 14% compounded quarterly

a)14.75

b)12.75

c)15.75

d) 13.75

e) 16.75

21. The home improvement center (HIC) has an employment contract with the newly hired CEO. The contract requires a lump sum payment of 32.4 million dollars to be paid to the CEP upon the successful completion of her first five years of service. HIC, wants ti set asude an equal amount of money at the end of each year to cover this anticipated cash outflow and will earn 7,25% on the funds. How much mut HIC set aside each year for this purpose?

a) 7 270 433

b)5 227 064

c)5 668 987

d) 5 606 026

e) 6 778 958

22. When interest us credited the instant it is earned is to be referred to as. :

a) simple interest

b) amortized daily interest

c) annually compounded interest

d) annuitized interest

e) continuously compounded interest

23. You plan on withdrawing quarterly payments for the next 10 years and have deposited 350 000$ in an account. If the rate of return is 5% compounded quarterly determine the value of the quarterly withdrawals.

a)15 172. 50

b) 12 172.50

c)14 172.50

d) 13 172.50

e) 11 172. 50

24. Eahc month that Jennifer pays a payment on her personal loan, the amount that is applied to the principal balance increases. Jennifer has a(n) ________ loan.

a) interest-only

b)Balloon

c)Variable

d) Amortized

e) Discount

25. The bonds issued by Hardwood Floors & more have a 9.25 % coupon and pay interest annually. The face value is 1000$ and the current market price is 1 014.60 the bonds mature in 16 years. What is the yields to maturity on these bonds?

a) 8.98%

b)9.07%

c)9.29%

d) 9.32%

e) 8.93%

26. A bond that pays no seperate interest payments us called a(n) :

a) investment grade bond

b) zero-coupon bond

c) coupon bond

d) premium bond

e) junk bond

27. All else the same, the existence of a _____ will increase the required return on a bond

a) conversion feature

b) call provision

c) sinking fund

d) trust deed

e) protective covenant

28. Clauses in the indenture agreement that limit the actions of a bond issuer as a safeguard for bondholders are referred to as ______ and include such features as _______.

a) protective covenants, a floating interest rate

b) protective covenants, a restriction on the sale of accompany assets

c) deferred clauses, a conversion feature

d) protective covenants, a call provision

e) deferred clauses, a restriction on issuing new debt

29. A bond type that pays a variable amount of coupon interest over time is called a _____ bond

a) floating rate

b) zero-coupon

c) municipal

d) junk

e) treasury