1. You purchase a two year annuity for $2800. The annuity pays $1500 each year. What is the annuity's approximate IRR?

2. You can purchase two three-year annuities today. One is valued at $2000, the other at $4000. The 1st annuity begins paying $1000 in a year. The 2nd annuity begins paying $1500 in two years. The interest rate is 5%. What is the PV of the portfolio?

3. Of the following car financing options, which one would you prefer while assuming that you prefer paying the least amount of dollars and that you face a 10% annual compound interest rate on all your financial decisions? a. A payment $10,000 today and another of $10,000 in one year from today. b. A lump-sum payment of $20,000 in two years from today. c. A lump-sum payment of $19,000 today only. d. A lump-sum payment of $20,000 today only

4. Which of the following could be an appropriate period used in a present value calculation? a.A year b.A month. c.Three months. d.All of these answers.

5. In a year, you expect to receive a payment of $1 million in a year. That annual interest rate is 5%. What is the present value of the future payment?

6. Assume you invest money in a bond that will pay you $250,000 in four years. The bond has an annual interest rate of 5%. You do not receive interest payments while you own the bond; it is zero-coupon. What is the bond's present value?

7. What is the present value of $100,000 that will be received 5 years from today if you face a 10% compound interest rate every year (rounded up to the nearest dollar)?

8. Given an inflation rate of 4% and a real rate of 5%, what is the corresponding nominal rate?

9. A bond has a coupon rate of 7% and a yield to maturity rate of 8%. The bond is ____.

10.A bond grants its holder the option to sell the bond back to the issuer at a fixed price at a fixed date prior to the bond's maturity. When evaluating the bond's value, the company should calculate the bond's _____.

12. A zero-coupon bond has a face value of $1000 and a market value of $800. The bond will mature in 5 years. What is its yield to maturity?

13. An annuity has an interest rate of 7% and makes a quarterly payment of $2000. The annuity is to last for 5 years. What is the present value of the annuity.

14.

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Subject | Mathematics |

Due By (Pacific Time) | 02/13/2015 01:15 pm |

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