Suppose the current one-year Treasury Bill rate is 3%, the current three-year Treasury Bond rate is 3.1%, and the current seven-year Treasury Bond rate is 3.2%. According to the expectations theory of interest rates, what would you expect the four-year Treasury rate to be three years from now?

a) 3.08% b) 3.17% c) 3.275% d) 3.4%

A bond has a current yield of 7%, a coupon rate of 8% with semiannual payments, a face value of $1,000 and matures in 10 years. What is its Yield to Maturity? (Hint: You have to find the price of the bond first and then find the Yield to Maturity)

a) 6.1% b) 6.7% c) 7.2% d) 8.3%

A bond has a Yield to Call of 6% and a coupon rate of 8% with semiannual payments. The bond has a face value of $1,000 and matures in 12 years. However, it can be called in 4 years for $1,050. How much is the bond worth?

a) $952 b) $1,110 c) $1,178 d) $1,233

A stock with a beta of 1.5 has a required return of 14%. If the expected (required) return on the market is 11%, then what is the risk free rate?

a) 1% b) 3% c) 5% d) 7%

A stock currently pays no dividends, however, it expects to pay a dividend of $1 four years from now. From that point onward, dividends are expected to grow by 10% per year forever. What is the fair price for this stock if it has a required return of 14%?

a) $16.87 b) $20.38 c) $24.51 d) $27.5