1. (Chapter 5) What is the effective annual interest rate(EAR) on a 12% APR automobile loan with monthly payments?
2. 9.00%
3. 11.38%
4. 10.81%
5. 12.68%

2. (Chapter 6) When the market interest rate exceeds a bond's coupon rate, the bond will:

1. sell for less than face value.
2. sell for more than face value.
3. decrease its coupon rate.
4. increase its coupon rate.

3. (Chapter 6) What is the price of a 7.50 % annual coupon bond with a $1,000 face value, maturing in 4 years? Assume a required return of 3.00% and pay semi-annually.

1. 1167.3
2. 1168.4
3. 1137.2
4. 1449.2

4. (Chapter 7) Current dividend forecasts for ABC Company are $10.00, $11.00, and $12.00 (next three years). At the end of three years, you anticipate selling your stock at a market price of $100. What is the price of the ABC stock, given a 10% expected return?

1. 84.2
2. 102.3
3. 93.1
4. 100

5. (Chapter 7) What is the value of a stock that expects to pay a $5 dividend next year and then increase the dividend at 2% per year indefinitely? Assume a 10.0% expected return.

1. 250
2. 50
3. 62.5
4. 41.7