Question 1

The following table shows the annual return on stock A over the past five years. What is the standard deviation of these returns (in percent)?

Year	Return %
2010	12.5
2011	6.4
2012	15.8
2013	5.6
2014	-37.2

2. What is the future value of $800,000 in 2 years at a continuously compounded interest rate of 5 percent?

3. Tom Jefferson will begin saving for retirement at the end of this year. He plans to make 25 annual deposits of $4,615 into an account that pays 10 percent annually. When he retires in 25 years, how much per year in level payments will he be able to withdraw at the end of the following 25 years from the same account, which will at the time of his retirement only pay 5 percent per annum (assume his ending balance is expected to be zero)?

4. If you borrow $100,000 to buy a house and the interest rate is 12 percent, what is the amount of the MONTHLY payment if it takes you 30 years to pay off the loan?

5. Petra, Inc. has $400,000 in current assets, $1.25 million in plant and equipment, and $250,000 in goodwill. In what order should these assets be reported on the balance sheet?

6. Cyclone Golf Resorts is developing a new golf course at a cost of $2,744,320. It expects the new golf course to generate cash flows of $1,223,445, $2,007,812, and $3,147,890 over the next three years. If the cost of capital is 13 precent, what is the NPV of this project?

7. Which of the following is an appropriate goal of the firm?

8. Giant Electronics is issuing 20-year bonds that will pay a semiannual coupon on a face value of $1,000. The coupon rate on the bonds is 7.8 percent per year. If the market rate on these bonds is 7 percent per year, what is the present value of these bonds?

9. An investment that pays the same amount at the end of each year for a fixed amount of time is called ___

10. Junkman's Warehouse and Storage Company has a bond outstanding with a face value of $1,000, an annual coupon payment of 5.5 percent, and 10 years until maturity. The current yield to maturity is 10 percent. How much profit would an investor make by buying the bond today and selling it in exactly one year if the yield to maturity one year from now is 4 percent?

11. Which of the following are the two basic sources of funds for a corporation?

		debt and equity
		assets and liabilities
		common stock and accounts receivable
		current assets and fixed assets

12. Chandler Sporting Goods produces baseball and football equipment and lines of clothing. This year the company had cash and marketable securities of 321,693, accounts payable of 1,053,225, inventory of 1,211,613, accounts receivable of 1,298,469, short-term notes payable of 328,734, other current assets of 147,231, and long-term debt of 1,500,000. What is the company's net working capital?

13. What is the theory that security prices reflect all public information and all historical information, but not all private information?

		weak-form market efficiency
		nominal-form market efficiency
		strong-form market efficiency
		semi-strong-form market efficiency

14. Miles Cyprus Corp. purchased a truck that currently has a book value of $1,000. If the firm sells the truck for $5,000 today, then what is the amount of cash that it will net after taxes if the firm is subject to a 30 percent marginal tax rate?

15. You have invested 40 percent of your portfolio in an investment with an expected return of 12 percent and 60 percent of your portfolio in an investment with an expected return of 20 percent. What is your expected return on this portfolio?

16. Preferred stock is sometimes regarded like a debt security because __________.

		preferred stockholders receive a residual payment rather than a fixed payment
		preferred dividends are like bond interest payments in that they are for a fixed amount
		legally preferred stock is a debt security
		preferred dividends are tax deductible just like interest payments on bonds

17.You would like to buy a used car. You borrow $8,000 from your uncle and agree to repay the loan at the end of three years in a one-time payment of $9,250. What is the interest rate on this loan?

18. Jane Barhop purchased a stock for $45 one year ago. That stock is now worth $65. During the year, the stock paid a dividend of $2.50. What was Jane's total return from holding the stock?

19. Herm Mueller has invested in a fund that will provide him a cash flow of $11,700 at the end of each of the next 20 years. If the interest rate is 8.5 percent, what is the present value of these cash flows?

20. If you just purchased one share of Facebook stock on a the NASDAQ stock exchange, you participated in