VistaJet common stock paid a dividend of $3.00 yesterday. The dividend is expected to grow at 4% per year. If investors require a return of 14% to hold VistaJets common shares, what is a fair market price for VistaJet common stock?

Multiple Choice

• $31.20

• $22.55

• $20.00

• $20.80

Two-year Government of Canada bonds is currently 4.75% and the yield on five-year Government of Canada bonds is currently 5.5%.

You are a borrower. You have decided that it is highly unlikely that the 3-year rate, two years from today, will rise above 5.50%. Based on this knowledge and the fact that you are a borrower, you should:

Multiple Choice

• Borrow long & lock in the five-year rate today you will minimize your total interest costs

• Borrow short (2-year) & then roll over into a 3-year loan when the 2-year loan matures you will minimize your total interest costs

• You are indifferent between borrowing short and rolling over or locking in the long rate initially

Five years ago you invested $10,000 in a mutual fund. You have earned the following annual returns over the last five years: {+18%, -4%, +10%, +22%, -16%}. What is the Geometric Mean of the five annual returns?

Multiple Choice

• 3.67%

• 5.01%

• 6.23%

• 4.33%

Burton Malkiels bond theorem #3 said that high coupon bonds have less price volatility than low coupon bonds. Which of the following statements correctly explains why this is true?

Multiple Choice

• High coupon bonds are usually issued by governments

• High coupon bonds are held principally by widows and institutions

• High coupon bonds have a greater proportion of their total cash flow occurring closer to today

• High coupon bonds allow their holders to defer the payment of income tax into the future