Multiple Choises

16. A bond that has a yield to maturity of 14% and a current yield of 8%

a. sells at a premium

b. sells at par

c. has a coupon rate in excess of the market rate of interest

d. has a coupon rate less than the market rate of interest

17. A firm has common stock outstanding that paid a $2 dividend last year. This stock has a 6% expected growth rate. If you have a 10% required rate of return, what is the most you should pay for this stock?

a. $12.50

b. $35.33

c. $50.00

d. $53.00

18. A firm has a current ratio of 2.4, a quick ratio of 1.5, an inventory turnover of 6 times, and current liabilities of $600,000. What is the firm.s level of sales?

a. $1,420,000

b. $1,960,000

c. $2,160,000

d. $3,240,000

19. The present value of an annuity for 5 years at 10% is 3.7908. The future value of an annuity for 5 years at 10% is 6.1051. How much will you have to pay each year on a $10,000 mortgage at 10% interest with a 5 year maturity?

a. $1,594.36

b. $2,637.97

c. $3,790.80

d. $6,105.10

20. A firm that must pay $2,000,000 in preferred dividends has $3,000,000 available for preferred and common dividends. It has 400,000 shares of common stock outstanding, and a .4 dividend payout ratio. The firm.s dividend per common share is

a. $1.00

b. $1.50

c. $5.00

d. $7.50