Question
1.
1-What is the present value of a constant perpetuity of 25 per year where the required rate of return is 5%?
193.61
22.73
500.00
250.00
2-Calculate the 2 year annuity factor if the required rate of return is 10%.
2.486
1.736
0.091
0.826
3-What is the present value of a cash inflow of 1250 four years from now if the required rate of return is 8% (Rounded to 2 decimal places)?
918.79
938.75
835.75
992.50
4-What is the future value of 875 six years from now if the required rate of return is 7% (Rounded to 2 decimal places)?
1550.50
1147.13
1281.00
1313.14
5-If the present value of a growing perpetuity is 214, the required rate of return is 10%, and growth rate is 3%, what is the cash flow in year 1? (Round to the nearest whole number).
3057
15
21
6
6-If a bond is trading at a premium, what is the relationship between the bond’s coupon rate, current yield and yield to maturity?
Coupon Rate < Current Yield < Yield to Maturity
Coupon Rate > Current Yield > Yield to Maturity
Coupon Rate > Yield to Maturity > Current Yield
Coupon Rate = Current Yield = Yield to Maturity
7-What is the current yield on a 3 year bond with 10% annual coupons, a par value of 100, and a current price of 107.87?
7.37%
7.00%
9.27%
10.00%
8-What is the yield to maturity for a 3 year bond with a 10% annual coupon if the bond is trading at par?
9.00%
11.00%
10.00%
9.75%
9-What is the price of a two year bond with a 9% annual coupon and a yield to maturity of 8%?
97.51
101.78
105.25
102.53
10-What is the definition of yield to maturity?
The return the investor gets from the income component of a bond as a percent of it’s current price
The overall return the investor makes if they purchase a bond today and hold to maturity
The overall return the investor makes as a percent of a bond’s par value
The return the investor gets from the income component of a bond as a percent of it’s par value
11-What is the weight of capital for ABC Limited which has the following capital structure? $5m of equity with a cost of equity of 15%; $2m of mezzanine finance with a cost of 9.5%; $1m of senior debt with a cost of debt of 7%
13.73%
8.63%
9.56%
12.63%
12-What is the expected share return given the following macro-economic probabilities? Probability of recession 20% – Share return 5%; Probability of steady state 60% – Share return 10%; Probability of boom 20% – Share return 15%
7%
12%
8%
10%
13-Calculate a four-day moving average for the price of the stock for the end of Day 7. Day 1 – 62.00; Day 2 – 56.00; Day 3 – 50.00; Day 4 – 60.00; Day 5 – 59.00; Day 6 – 55.00; Day 7 – 59.00; Day 8 – 63.00
56.25
57.00
58.25
59.00
14-Calculate a three-day weighted moving average for the price of the stock for the end of Day 7 where the most recent price has a weight of 3, the next has a weight of 2, and the oldest price has a weight of 1. Day 1 – 62.00; Day 2 – 56.00; Day 3 – 50.00; Day 4 – 60.00; Day 5 – 59.00; Day 6 – 55.00; Day 7 – 59.00; Day 8 – 63.00
57.17
57.83
56.00
57.67
15-An insurance company has provided you with a sample of paid claims. The sample includes the following claims: 192, 113, 200, 287, and 225. What are the mean and the variance respectively of this sample rounded to nearest whole number?
210, 3942
210, 63
203, 63
203, 3942
16-In the simple linear regression equation y = α + βx + ε, what is β?
The error term
The slope of the line of best fit
The independent variable
The y intercept
17-Covariance is best described as:
a measure of how much two sets of numbers change together
a measure of how far one set of numbers are spread out from each other
a weighted average of all possible values that a variable can take on
the square root of the variance
18-What does a diagram of a perfectly positive correlation look like?
A curved line that slopes from the bottom left to the top right quardrant
A perfectly straight line that slopes from the bottom left to the top right quardrant
A perfectly straight line that slopes from the top left to the bottom right quardrant
A scatter plot that have dots all over the place
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