1. (TCO 1) Which of the these activities is a capital budgeting task? (Points : 4)

2. (TCO 1) Market value is important to the financial manager because: (Points : 4)

3. (TCO 1) Use the following tax table to answer this question:


4. (TCO 3) Regional Bank offers you an   APR of 19 percent compounded semiannually, and Local Bank offers you an EAR   of 19.50 percent for a new automobile loan. You should choose ______________   because its _______ is lower. (Points : 4)

5. (TCO 3) You deposited $8,000 in your bank account today. Which of the following will increase the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply: (Points : 4)

6. (TCO 3) Thirteen years from now, you will be inheriting $30,000. What is this inheritance worth to you today, if you can earn four percent interest compounded annually? (Points : 4)

7. (TCO 3) The new home that you want to buy costs $249,500. You plan to make a cash down payment of 20 percent and finance the balance over 10 years at 6.75 percent. What will be the amount of your monthly mortgage payment? (Points : 4)

8. (TCO 3) Which type of loan is comparable to the present value of a future lump sum? (Points : 4)

9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 16 percent? Assume annual payments. (Points : 4)


10. (TCO 6) Which of the following is   true regarding the primary market? (Points : 4)

11. (TCO 7) Which one of the following statements concerning financial leverage is correct? (Points : 4

12. (TCO 3) A 10-year bond pays 11 percent interest on a $1000 face value annually. If it currently sells for $1,195, what is its approximate yield to maturity? (Points : 4)


13. (TCO 8) Which of the following is   true regarding bonds? (Points : 4)

14. (TCO 8) Which one of the following bonds is the most sensitive to interest rate movements? (Points : 4)


15. (TCO 6) A call provision in a bond   agreement grants the issuer the right to: (Points : 4)


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