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1. If you deposit $12000 in a savings account at 10.3% interest per year, how much will you have in 27 years? (Answer to the nearest dollar)

5 points

QUESTION 2

1. How much money would you need to deposit in an account today so that you would have $5000 in the account in 22 years, given that the account earns 4% per year? (Answer to the nearest penny)

5 points

QUESTION 3

1. Suppose you are the executor of your Aunt's estate, and she desires to provide her daughter with $35,000 at the end of each year for the next 12 years. If the bank provides a guaranteed account which earns 4.5% per year simple interest, how much money should be deposited into this guaranteed account to fully fund this request? (Answer to the nearest dollar)

5 points

QUESTION 4

1. If you deposit $2,000 at the end of each year into an IRA account that is expected to earn 8% per year simple interest, how much will be in the account in 20 years? (Answer to the nearest dollar)

5 points

QUESTION 5

1. Suppose you want to buy a house that costs $230,000. You are required to put 10% down, which means the amount to be borrowed is 90% of the price of the house. If you want a 30 year mortgage, and the borrowing rate is 5.3% APR compounded monthly, what would be your monthly payment? (Answer to the nearest penny)

5 points

QUESTION 6

1. Suppose you want to buy a car that costs $19,000. If the dealer is offering 100% financing at 7% APR compounded monthly for a 5 year loan, what would be the monthly payment? (Answer to the nearest penny)

5 points

QUESTION 7

1. Suppose you have accumulated $21,000 in credit card debt. If the interest rate on the credit card is 24.3% APR compounded monthly, how many years will it take you to pay off this debt if you pay $500 per month? (Answer to the nearest tenth of a year)

5 points

QUESTION 8

1. IF an interest rate is quoted as 11.6% APR compounded monthly, what would be the annual percentage yield (APY)? (Answer to the nearest tenth of a percent)

5 points

QUESTION 9

1. Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $82,000 per year on each birthday from age 70 to age 100 (a total of 31 withdrawals). If the account which contains your savings earns 5% per year simple interest, how much money needs to be in the account by the time you reach your 70th birthday? (Answer to the nearest dollar.) Hint: This can be solved as a 30-year ordinary annuity plus one withdrawal at age 70, or as a 31-year annuity due.

5 points

QUESTION 10

1. Today is your 25th birthday, and you have calculated that you need to accumulate $1.6 Million by your 70th birthday in order to retire in a manner in which you are accustomed to living. If your retirement account earns 8.4% per year simple interest, how much must you deposit on each of your birthdays (from 26 to 70) in order to reach your target retirement savings on your 70th birthday? (Answer to the nearest dollar.)

5 points

QUESTION 11

1. Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $5,000 per month beginning with the first month after your 70th birthday until you reach your birthday at age 100. If the account which contains your savings earns 7% APR compounded monthly, how much money needs to be in the account by the time you reach your 70th birthday? (Answer to the nearest dollar.)

5 points

QUESTION 12

1. Today is your 25th birthday, and you want to save $2 Million by your birthday at age 70. If you expect to earn 8% APR compounded monthly in your retirement account, what constant payment at the end of each month must you deposit into the account through your 70th birthday in order to reach your retirement savings goal on your 70th birthday? (Answer to the nearest penny.)

5 points

QUESTION 13

1. A 6.9% coupon bearing bond pays interest semi-annually and has a maturity of 30 years. If the annual yield to maturity is 9.1%, what is the current price of this bond? (Answer to the nearest penny.)

5 points

QUESTION 14

1. A 6.24% coupon bearing bond pays interest semi-annually and has a maturity of 30 years. If the annual yield to maturity is 5.88%, what is the current price of this bond?

   a.	951.44
   b.	951.69
   c.	1,050.20
   d.	1,050.46
   e.	1,125.24
   f.	1,125.44

5 points

QUESTION 15

1. A 6.1% coupon bearing bond pays interest semi-annually and has a maturity of 19 years. If the current price of the bond is $953.86, what is the yield to maturity of this bond? (Answer to the nearest tenth of a percent, e.g. 12.34%)

5 points

QUESTION 16

1. A bond has a coupon rate of 6.20% and pays interest semi-annually. If the bond has a maturity of 25 years and is currently priced at $819.53, what is the annual yield to maturity of this bond?

   a.	3.93%
   b.	5.44%
   c.	6.20%
   d.	6.44%
   e.	7.60%
   f.	7.86%
   g.	8.20%
   h.	15.20%
   i.	The yield to maturity cannot be determined with the information given.

5 points

QUESTION 17

1. A bond has a coupon rate of 8% and pays interest semi-annually. If the bond has a maturity of 20 years and is currently priced at $1,408.49, what is the annual yield to maturity of this bond?

   a.	3.82%
   b.	4.80%
   c.	5.47%
   d.	6.00%
   e.	6.44%
   f.	7.24%
   g.	9.44%
   h.	14.08%
   i.	The yield to maturity cannot be determined with the information given.

5 points

QUESTION 18

1. A company just paid a dividend of $0.51 per share and you expect the dividend to grow at a constant rate of 5.3% per year indefinitely into the future. If the required rate of return is 13.9% per year, what would be a fair price for this stock today? (Answer to the nearest penny per share.)

5 points

QUESTION 19

1. A company has announced that it will pay a dividend of $2.01 per share next year, and thereafter you expect the dividend to grow at a constant rate of 5.7% per year indefinitely into the future. If the required rate of return is 8.3% per year, what would be a fair price for the stock today? (Answer to the nearest penny.)

5 points

QUESTION 20

1. A company just paid a dividend of $1.20 per share. The consensus forecast of financial analysts is a dividend of $1.60 per share next year and $2.20 per share two years from now. Thereafter, you expect the dividend to grow 5% per year indefinitely into the future. If the required rate of return is 9% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)

5 points

QUESTION 21

1. A company just paid a dividend of $1.70 per share. You expect the dividend to grow 14% over the next year and 9% two years from now. After two years, you have estimated that the dividend will continue to grow indefinitely at the rate of 4% per year. If the required rate of return is 9% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)

5 points (Extra Credit)

QUESTION 22

1. A company just paid a dividend of $1.10 per share. The consensus forecast of financial analysts is a dividend of $1.80 per share next year, $2.40 per share two years from now, and $2.50 per share in three years. You expect the price of the stock to be $20 in two years. If the required rate of return is 12% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)

5 points (Extra Credit)

QUESTION 23

1. Suppose you would like to fund the salary of a professor of finance at a UCLAso that the university could hire an additional faculty member without incurring any additional cost from the university budget. You estimate the salary to be $100,000 per year the first year the position is established, and you want to include a provision to increase the salary each year to cover inflation, estimated to be 2% per year. If you want this new position to be funded into perpetuity (forever), how much money must you donate to the university foundation today if the foundation can invest the funds at 8% per year? (Answer to the nearest dollar.)