Question 1 (1 point)

Of the following car financing options, which one would you prefer while assuming that you prefer paying the least amount of dollars and that you face a 10% annual compound interest rate on all your financial decisions?

Question 1 options:

A lump-sum payment of $20,000 in two years from today.

A payment $10,000 today and another of $10,000 in one year from today.

A lump-sum payment of $19,000 today only.

A lump-sum payment of $20,000 today only.

Question 2 (1 point)

Which of the following could be an appropriate period used in a present value calculation?

Question 2 options:

Three months.

A year

All of these answers.

A month.

Question 3 (1 point)

In a year, you expect to receive a payment of $1 million in a year. That annual interest rate is 5%. What is the present value of the future payment?

Question 3 options:

$666,667

$1,050,000

$952,381

$995,025

Question 4 (1 point)

What is the present value of $100,000 that will be received 5 years from today if you face a 10% compound interest rate every year (rounded up to the nearest dollar)?

Question 4 options:

52092

72092

62092

82092

Question 5 (1 point)

Which of the following is the definition of the Macaulay duration?

Question 5 options:

The weighted average time, measured in years, until cash flows are received.

All of these answers.

The percentage change in price for a unit change in yield.

The price sensitivity of a bond.

Question 6 (1 point)

Given an inflation rate of 3% and a real rate of 5%, what is the corresponding nominal rate?

Question 6 options:

108%

9.2%

8%

4%

Question 7 (1 point)

A bond has a coupon rate of 7% and a yield to maturity rate of 8%. The bond is ____.

Question 7 options:

selling at par.

selling at a premium.

selling at a discount.

selling at yield

Question 8 (1 point)

A bond grants its holder the option to sell the bond back to the issuer at a fixed price at a fixed date prior to the bond's maturity. When evaluating the bond's value, the company should calculate the bond's _____.

Question 8 options:

yield to worst.

yield to put.

yield to call.

yield to discount.

Question 9 (1 point)

Which of the following statements regarding bonds and par values is true?

Question 9 options:

A bond selling at par has a coupon rate so the bond is worth its redemption value at maturity.

The par value of a bond never changes.

Corporate bonds usually have par values equal to $10,000.

All of these answers.

Question 10 (1 point)

A zero-coupon bond has a face value of $1000 and a market value of $800. The bond will mature in 5 years. What is its yield to maturity?

Question 10 options:

-4.37%

205.17%

104.56%

4.56%

Question 11 (1 point)

Which of the following influences a bond's price risk?

Question 11 options:

The possibility that market interest rates will increase.

The possibility the issuing company's credit rating will be decreased.

All of these answers.

Mutual funds, pension managers and banks divest themselves of the issuing company's bonds.

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