Please answer questions in 2 hours. I have done them all the free response is what I need the most help with and question 20. Thank you.

Question 2(3.9 points)

Two years ago an investor purchased a 4% semi-annual compounding coupon bond with a remaining maturity of 20 years at a price of (at that time) 90% of par. Today, i.e. two years after the purchase, the investor realizes that the bond has exactly the same price like it had two years ago (i.e. 90%). Based on this information, which of the following answers is correct:

Question 2 options:

The YTM of the 4% Bond today is the same like two years ago.

Overall, the profit for the investor from this investment over the two years is Zero.

Over the remaining life of the bond, the value of the principal exceeds the value of the coupons.

If the investor held the 4% coupon bond until maturity, the overall return from this investment over the 18 years would be 100% minus 90%, i.e. 10%.

None of the above answers is correct.

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Question 3(3.9 points)

You have developed the following data on three stocks: Stock A has a standard deviation of .15 and a Beta of .79. Stock B has a standard deviation of .25 and a Beta of .61. Stock C has a standard deviation of .20 and a Beta of 1.29. If you are a risk minimizer, you should choose Stock _____ if it is to be held in isolation and Stock _____ if it is to be held as part of a well-diversified portfolio.

Question 3 options:

A, A

A, B

B, B

C, A

C, B

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Question 4(3.9 points)

Stewart Inc.'s latest EPS was $3.50, its book value per share was $22.75, it had 215,000 shares outstanding, and its debt-to-assets ratio was 46%. How much debt was outstanding?

Question 4 options:

$3,393,738

$3,572,356

$3,958,289

$4,166,620

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Question 5(3.9 points)

If a firms debt-to-equity ratio is 2.9 , what is its total debt to total asset ratio? Show your answer to the nearest .1%. If your answer is 45.6%, enter your answer as 45.6 rather than 45.6% or .456.

Your Answer:Question 5 options:

Answer

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Question 6(3.9 points)

You have just taken out a 10-year, $12,075 loan to purchase a new car. This loan is to be repaid in 120 equal end-of-month installments. If each of the monthly installments is $150, what is the effective annual interest rate on this car loan?

Question 6 options:

6.5431%

7.8942%

8.544%

8.8871%

9.0438%

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Question 7(3.9 points)

The risk-free rate, kRF, is 6.6 percent and the market risk premium, (kM - kRF), is 5 percent. Assume that required returns are based on the CAPM. Your $1 million portfolio consists of $ 679 ,000 invested in a stock that has a beta of 1.5 and the remainder invested in a stock that has a beta of 1.7 . What is the required return on this portfolio? Enter your answer to the nearest .1%. Do not use the % sign in your answer, thus 12.1% is 12. 1 rather than 12.1 or .121.

Your Answer:Question 7 options:

Answer

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Question 8(3.9 points)

Roadside Markets has a 6.75 percent coupon bond outstanding that matures in 10.5 years. The bond pays interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 7.2 percent?

Question 8 options:

$899.85

$903.42

$1,007.52

$967.24

$899.80

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Question 9(3.9 points)

If the CEO of a large, diversified, firm were filling out a fitness report on a division manager (i.e., "grading" the manager), which of the following situations would be likely to cause the manager to receive a better grade? In all cases, assume that other things are held constant.

Question 9 options:

The division's DSO (days' sales outstanding) is 40, whereas the average for its competitors is 30.

The division's basic earning power ratio is above the average of other firms in its industry.

The division's total assets turnover ratio is below the average for other firms in its industry.

The division's debt ratio is above the average for other firms in the industry.

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Question 10(3.9 points)

You have determined the profitability of a planned project by finding the present value of all the cash flows from that project. Which of the following would cause the project to look more appealing in terms of the present value of those cash flows?

Question 10 options:

The discount rate decreases.

The cash flows are extended over a longer period of time, but the total amount of the cash flows remains the same.

The discount rate increases.

Answers b and c above.

Answers a and b above.

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Question 11(3.9 points)

You hold a diversified portfolio consisting of a $10,000 investment in each of 15 different common stocks (i.e., your total investment is $150,000). The portfolio beta is equal to 1.1 . You have decided to sell one of your stocks which has a beta equal to 1.6 for $10,000. You plan to use the proceeds to purchase another stock which has a beta equal to 1.8 . What will be the beta of the new portfolio? Show your answer to 2 decimal places.

Your Answer:Question 11 options:

Answer

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Question 12(3.9 points)

Consider Consider the following information and then calculate the required rate of return for the Universal Investment Fund, which holds 4 stocks. The market's required rate of return is 13.25%, the risk-free rate is 7.00%, and the Fund's assets are as follows:

Stock	Investment	Beta
A	$ 200,000	1.50
B	$ 300,000	-0.50
C	$ 500,000	1.25
D	$1,000,000	0.75

Question 12 options:

9.58%

10.09%

11.18%

11.77%

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Question 13(3.9 points)

From a finance perspective, what is the primary goal of the corporation?

Question 13 options:

Maximize the pay and compensation of employees and managers of the firm.

Maximize the value of the stockholders because they are the owners of the corporation.

Maximize the wealth of all stakeholders if the firm wants to continue to exist.

Maximize the societal value to minimize governmental interference.

None of the above.

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Question 14(3.9 points)

Lory Company has a total debt to total assets ratio of 45% and a current ratio of 4.1. The firm's stock sells for $ 5.2 per share. The total market value of the equity is $ 5.1 million. The market-to-book ratio is 5.8 . What is the book value per share? Show your answer to the nearest $.01. Do not use the $ symbol in your answer, thus if your answer is $2.80 enter 2.80.

Your Answer:Question 14 options:

Answer

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Question 15(3.9 points)

New Hampshire Services reported $ 5.7 million of retained earnings on its December 31, 2007 balance sheet. In 2008, the company lost money; its net income was -$500,000 (negative $500,000). Despite the loss, the company still paid a $ 1.87 per share dividend. The company's earnings per share for 2008 were -$2.50 (negative $2.50). What was the level of retained earnings on the company's December 31, 2008 balance sheet? Show your answer to the nearest dollar, but do not use the $ or , signs in your answer.

Your Answer:Question 15 options:

Answer

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Question 16(3.9 points)

The CFO of Mulroney Brothers has suggested that the company should issue $300 million worth of common stock and use the proceeds to reduce some of the companys outstanding debt. Assume that the company adopts this policy, and that total assets and operating income (EBIT) remain the same. The companys tax rate will also remain the same. Which of the following will occur:

Question 16 options:

The company's net income will increase.

The company's taxable income will fall.

The company will pay less in taxes.

The firm's sales will increase

All of the above are correct.

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Question 17(3.9 points)

Which of the following statements is most correct?

Question 17 options:

Rising inflation makes the actual yield to maturity on a bond greater than the quoted yield to maturity which is based on market prices.

The yield to maturity for a coupon bond that sells at its par value consists entirely of an interest yield; it has a zero expected capital gains yield.

On an expected yield basis, the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss.

The market value of a bond will always approach its par value as its maturity date approaches. This holds true even if the firm enters bankruptcy.

All of the statements above are false.

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Question 18(3.9 points)

A fixed coupon bond with par value of $1,000 has a coupon of 8%, semiannually payable. The current annual nominal market interest rate (i.e., yield to maturity) for this bond is 6%. Therefore the bond is selling .. and the bond's current yield is ..

Question 18 options:

at par value; at 8%

at a discount; greater than 8%

at a discount; less than 8%

at a premium; less than 8%

at a premium; greater than 8%

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Question 19(3.9 points)

You just graduated, and you plan to work for 10 years and then to leave for the Australian "Outback" bush country. You figure you can save $1,000 a year for the first 5 years and $2,000 a year for the next 5 years. These savings cash flows will start one year from now. In addition, your family has just given you a $5,000 graduation gift. If you put the gift now, and your future savings when they start, into an account which pays 8 percent compounded annually, what will your financial "stake" be when you leave for Australia 10 years from now?

Question 19 options:

$31,148

$21,432

$28,393

$16,651

$20,000

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Question 20(8 points)

You plan to buy a $240,000 house with a 30 year mortgage with a 4.8% nominal annual rate (.P.R.) Payments are monthly, interest is monthly compounded, and you did not make a down payment. Assume you make all payments on time, at the end of the month. Answer the following questions.

a)How much is each monthly payment? [2 decimal places]

b)How much interest will you pay with () your 75th payment? [2 decimal places]

c)Now assume you have made payments such that you only owe $150,000 on the mortgage. You decide to increase your payments by $100 per month. How many payments will it take to pay off your mortgage?

Show your inputs for possible partial credit.

Question 20 options:

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Question 21(20 points)

Match the numbers to the accounts on the below scrambled income statement balance sheet. Numbers are to the right of the account. Thus Gross Profit 2,313 means Gross Profit = $2313.

Gross Profit 2,313 ; Other Long Term Liabilities 181 ; Stores and Distribution Expense 1,703 ; Cost of Goods Sold 1,430 ; Paid-In Capital 434 ; Retained Earnings 2,550 ; Total Stockholders Equity 1,389 ; Income Before Taxes 99 ; Accounts Payable 141 ; Accrued Expenses 282 ; Net Income 52 ; Marketing, General and Administrative Expense 458 ; Change in Retained Earnings 46 ; Cash and Equivalents 520 ; Receivables 52 ; Class A Common Stock 1 ; Deferred Income Taxes (Current Asset) 16 ; Depreciation 30 ; Other Current Assets 116 ; Total Current Assets 1,164 ; Property and Equipment, net 968 ; Total Current Liabilities 487 ; Long-Term Portion of Borrowings, Net 291 ; Operating Income 114 ; Interest Expense, Net 15 ; Total Assets 2,505 ; Short-Term Portion of Deferred Lease Credits (current liability) 35 ; Leasehold Financing Obligations (Long Term Liability) 51 ; Long-Term Portion of Deferred Lease Credits (Long Term Liability) 106 ; Other Long Term Assets _________ ; Restructuring Charges ________ ; Dividends _________ ; Total Long Term Liabilities ________ ; Inventories ________ ; Net Sales _________ ; Tax Expense_______ ; Short-Term Portion of Borrowings, Net _________ ; Total Liabilities and Stockholders Equity _________ ; Accumulated Other Comprehensive Loss, net of tax (an Equity account) _________

Question 21 options:

12345678910	Accumulated Other Comprehensive Loss, net of tax (an Equity account)
12345678910	Inventories
12345678910	Dividends
12345678910	Other Long Term Assets
12345678910	Total Liabilities and Stockholders Equity
12345678910	Short-Term Portion of Borrowings, Net
12345678910	Tax Expense
12345678910	Restructuring Charges
12345678910	Net Sales
12345678910	Total Long Term Liabilities

1.	373
2.	8
3.	6
4.	629
5.	460
6.	3743
7.	47
8.	29
9.	2505
10.	-1596

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