5.	A year ago, an investor purchased 900 shares of Old Fashioned Curtain and Drapes preferred stock at a price of $36.00/share. The firm has just paid its annual dividend of $5.00. Now the share is priced at $32.40 in the market. What is the dividend yield of the stock based on its current price?
	a)	25.43%
	b)	5.43%
	c)	10.00%
	d)	13.89%
	e)	15.43%

6.	Amy's Home Crafts has some bonds outstanding, currently with 28 years remaining to maturity. The coupon rate is 9%, and the interest is paid annually. The face value of the bonds is $1,000. The bonds currently sell in the market at a price of $1,081.03. What is the yield to maturity of this bond?
	a)	5.89%
	b)	8.25%
	c)	10.81%
	d)	9.80%
	e)	6.20%

7.

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%

8.	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?
	a)	4.43%
	b)	11.78%
	c)	4.11%
	d)	3.78%
	e)	12.43%

9.	What is the future value of regular annuity of $2,000 per year for 10 years if the interest rate is 9% per year?
	a)	$30,386
	b)	$40,281
	c)	$27,877
	d)	$12,835
	e)	$13,990

10.	How many years will it take for the amount of $74,000 to grow to $109,960 at an annual rate of 2.00%?
	a)	24.00 years
	b)	23.00 years
	c)	20.00 years
	d)	21.00 years
	e)	18.00 years

11.	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.)
	a)	39.19%
	b)	15.99%
	c)	5.36%
	d)	1.60%
	e)	23.99%

12.	What is the present value of a perpetuity of $3,300 per year at a discount rate of 10% per year?
	a)	$30,000
	b)	$36,300
	c)	$33,000
	d)	$33,000
	e)	The present value of this perpetuity is infinitely large.

13.	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%

14.	Western Cowboy Gear Corp. has some bonds outstanding, currently with 20 years remaining to maturity. The coupon rate is 9%, and the interest is paid monthly. The face value of the bonds is $1,000. How much interest must the firm pay on each outstanding bond each month?
	a)	$90.00
	b)	$30.00
	c)	$7.50
	d)	$45.00
	e)	$22.50

15.	What is the future value of an annuity due of $1,000 per year for 10 years if the interest rate is 10% per year?
	a)	$10,000
	b)	$15,937
	c)	$6,145
	d)	$17,531
	e)	$6,759

16.	Find the present value of $8,800 to be received 25 years from today. The discount rate is 10% per year compounded monthly
	a)	$812.20
	b)	$7,151.21
	c)	$802.86
	d)	$985.32
	e)	$729.87

17.	A life insurance company is selling a perpetuity contract that will pay $900 per month. The contract sells for $61,000. What is the APR of this investment?
	a)	1.19%
	b)	1.48%
	c)	2.97%
	d)	19.21%
	e)	17.70%

18.	What is the EAR of 19% compounded semi-annually?
	a)	20.397%
	b)	20.925%
	c)	20.745%
	d)	19.902%
	e)	19.000%

19.	A person who is now 40 years old is planning for his retirement. He expects to save $7,000 each year for the next 25 years. Based on the current yield curve, he expects to earn an average rate of 5% per year. He will make the first deposit to his retirement savings account exactly one year from today. How much will he have in his retirement savings account in 25 years?
	a)	$318,181
	b)	$47.73
	c)	$350,794
	d)	$334,090
	e)	$175,000

20.	Pacific Enterprises Inc. stock does not now pay dividends. Investors expect that it will begin paying a dividend of $1.75/share in exactly 5 years at time 5. That is, they forecast that D5 will be $1.75/share. Investors expect that the dividend will then remain at that level of $1.75/share forever after that. They require a return of 16.00% on this stock. What is the value of this stock today based on the discounted dividend model?
	a)	$9.43
	b)	$6.04
	c)	$7.01
	d)	$5.21
	e)	$10.94

21.	Find the present value of $5,800 to be received 5 years from today. The discount rate is 6%.
	a)	$5,851.03
	b)	$4,334.10
	c)	$4,767.51
	d)	$7,761.71
	e)	$5,800.00

22.	An investor is offered this annuity product: he will invest a total of $340,000 now and will earn an interest rate is 14% per year. He will receive 25 annual payments, the first of which will be exactly one year from today. How much will he receive in each of the annual payments?
	a)	$56,395
	b)	$22,045
	c)	$49,469
	d)	$6.87
	e)	$43,394

23.	A zero coupon bond will mature in 10 years and pay its face value of $1,000. Its current market value is $770. What is its implicit yield to maturity based on semi-annual compounding?
	a)	23.00%
	b)	29.87%
	c)	1.32%
	d)	2.648%
	e)	2.30%

24.	Old Fashioned Curtain and Drapes just paid a dividend, D0, of $0.40/share on its common stock. Investors expect that its dividend will decline at a constant rate of 4% per year. That is, the expected growth rate g is -4%. They require a return of 15% on this stock. What is the value of this stock based on the discounted dividend model?
	a)	$2.11
	b)	$2.56
	c)	$3.49
	d)	$3.78
	e)	$2.02