Tom has $100,000 in his investment account. He anticipates earning an annual return of 5% compounded annually for each of the next 25 years. How much will Tom's investment be worth at the end of 25 years? A) $125,000 B) $338,635 C) $477,271 D) $250,000 621 Sven purchased a 5-year, semiannual,7%, $10,000 callable bond for $9.050. He believes that the company will call the bond after 3 years. The issuer has to pay a premium of $50 per $1,000 of face amount if they call the bond early. What is the effective annual yield to call if the company does call the bond early? A) 10.79% B) 11.08% C) 12.31% D) 12.69% Page 2 of 31 Ken has decided to purchase a Save Inc. bond with a face value of $15,000 and eight years remaining until maturity. The coupon rate is 6.15%, while the current market rate is 3.85%. What price should Ken pay for the Save Inc. bond? OA) $14,212.45 B) $17,337.25 C) $17,356.13 D) $17.477.41 Page 3 of 31 Why would an investor want to diversify their investment portfolio? OA) To own different companies within the same industry B) To mitigate unsystematic risk C) To increase the holdings of a specific security D) To diversify away systematic risk within the portfolio With regard to the calculation of a security's holding period return, which of the following statements is/are true? (select all that apply) A) The calculation does not work for common shares. B) The calculation makes the assumption that all income from the security is used to purchase additional units of the security C) The total return on the security is compared with the total cost of the security D) The calculation recognizes income and capital appreciation associated with the security during the holding period. Page 7 of 31