Which statement below is false with respect to your investment style in a 401(k) plan? A) Be ultra-conservative, select fixed-income annuities. B) Be conservative, select money market funds. C) Be somewhat aggressive, particularly if you are a young person with a long investment horizon. D) Be ultra-aggressive, select risky investments and frequently time the markets. […]
Simpson Industries Inc. bonds currently have 12 years remaining to maturity. What is the current price of the firm’s semi-annual bonds if they carry a face value of $1,000, an annual coupon rate of 8% and an annual yield to maturity of 7%? A) $924.64 B) $1,000.00 C) $1,079.43 D) $1,080.29 ANSWER D […]
You usually open a regular charge account as a shopping convenience. Indicate whether the statement is true or false ANSWER TRUE
Answer the questions below using the following information on stocks A, B, and C. A B C Expected Return 20% 21% 10% Standard Deviation 12% 10% 10% Beta 1.8 2.2 0.8 Assume the risk-free rate of return is 3% and the expected market return is 12% a. Calculate the required return for stocks A, B, […]
A cashier’s check is written by a bank and drawn against the bank when paid. Indicate whether the statement is true or false ANSWER TRUE
Living benefits insurance A) pays benefits only to insured who are over 65 years of age. B) will not pay out benefits to individuals confined to nursing homes. C) is usually available only on term insurance policies. D) provides benefits to insureds who are terminally ill or cannot care for themselves. ANSWER D
You have $25,000 in an investment account today. How much will be in the account in 30 years if the account earns (a) 8% per year, (b) 8% compounded semiannually, (c) 8% compounded quarterly, (d) 8% compounded monthly, and (e) 8% compounded daily? Comment on the effect of more frequent compounding. ANSWER (a) […]
Which of the following is a type of financial security issued by a corporation in need of capital? A) bonds B) preferred stock C) common stock D) all of the above ANSWER D
A revolving credit account provides a credit limit and a minimum monthly payment. Indicate whether the statement is true or false ANSWER TRUE
When performing comparable analysis the ideal comparable firm will have each of the following characteristics EXCEPT: A) it is in a similar industry. B) it is of a similar size. C) it has similar risk as measured by beta. D) these are all desirable comparables. ANSWER D
