QUESTION 11

1. A 20-year, $1,000 par value bond has a 9% annual coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be 5 years from now?

   	A.	$965.84
   	B.	$941.86
   	C.	$933.09
   	D.	$951.87

1 points

QUESTION 12

1. A $1,000 face value corporate bond pays a $50 coupon every six months. The bond matures in 12 years and sells at a price of $1,080. What is the bonds nominal yield to maturity?

   	A.	8.90%
   	B.	9.31%
   	C.	8.65%
   	D.	8.28%

1 points

QUESTION 13

1. A 12-year, 8.5% annual coupon bond has a yield to maturity of 9.5% and a par value of $1,000. What is the bonds current yield?

   	A.	9.14%
   	B.	8.95%
   	C.	2.15%
   	D.	6.36%

1 points

QUESTION 14

1. An 11-year, $1,000 face value bond has an annual coupon rate of 8% and its yield to maturity is 7.5%. The bond can be called 3 years from now at a price of $1,060. What is the bonds nominal yield to call?

   	A.	8.54%
   	B.	8.41%
   	C.	9.82%
   	D.	8.38%

1 points

QUESTION 15

1. Kholdy Inc's bonds currently sell for $1,275. They pay a $120 annual coupon and have a 20-year maturity, but they can be called in 5 years at $1,120. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between the bond's YTM and its YTC?

   	A.	1.82%
   	B.	1.68%
   	C.	1.54%
   	D.	1.48%

1 points

QUESTION 16

1. T. Martell Inc.'s stock has a 50% chance of producing a 30% return, a 25% chance of producing a 9% return, and a 25% chance of producing a -25% return. What is Martell's expected return?

   	A.	11.0%
   	B.	15.2%
   	C.	16.8%
   	D.	16.0%

1 points

QUESTION 17

1. Given the following probability distribution, what are the expected return and the standard deviation of returns for Security J?

   State P_i k_J

   1 0.2 10%

   2 0.6 15

   3 0.2 20

   	A.	12%; 5.18%
   	B.	15%; 10.00%
   	C.	15%; 6.50%
   	D.	15%; 3.16%

1 points

QUESTION 18

1. Miller Inc. is considering a capital budgeting project that has an expected return of 10% and a standard deviation of 25%. What is the project's coefficient of variation?

   	A.	3.0
   	B.	2.5
   	C.	3.4
   	D.	1.8

1 points

QUESTION 19

1. The CFO of Brady Boots has estimated the returns to Bradys stock, depending on the state of the economy. He has also compiled analysts expectations for the economy.

   Economy Probability Return

   Recession 0.1 -23%

   Below average 0.1 -8

   Average 0.4 6

   Above average 0.2 17

   Boom 0.2 24

   Given this data, what is the companys coefficient of variation?

   	A.	2.26
   	B.	1.84
   	C.	25.39
   	D.	1.94

1 points

QUESTION 20

1. Apex Roofing's stock has a beta of 1.50, its required return is 14.00%, and the risk-free rate is 5.00%. What is the required rate of return on the stock market? (Hint: First find the market risk premium.)

   	A.	10.50%
   	B.	11.00%
   	C.	11.50%
   	D.	12.00%