1. Dhalia Corporation issued $100 million bonds that mature in 30 years and have a 5% coupon rate that is paid annually. If the bonds were sold to yield 3.4%, determine the price of the bonds at the end of year 25. A. $103,202,658 B. $105,659,506 C. $107,244,589 D. $118,559,603 E. $126,658,944 2. Dhalia Corporation issued $100 million bonds that mature in 30 years and have a 5% coupon rate that is paid annually. If the bonds were sold to yield 3.4%, determine the price of the bonds at the end of year 15. A. $103,202,658 B. $105,659,506 C. $107,244,589 D. $118,559,603 E. $126,658,944 3. Dhalia Corporation issued $100 million bonds that mature in 30 years and have a 5% coupon rate that is paid annually. If the bonds were sold to yield 3.4%, determine the price of the bonds at the end of year 5. A. $103,202,658 B. $105,659,506 C. $107,244,589 D. $118,559,603 E. $126,658,944 4. A zero coupon bond with a face value of $1,000 is issued with an initial price of $387.50. The bond matures in 30 years. What is the implicit interest, in dollars, for the first year of the bond's life? A. $10.38 B. $12.44 C. $14.42 D. $18.79 E. $22.50 5. J&J Enterprises wants to issue eighty 20-year, $1,000 zero-coupon bonds. If each bond is to yield 8%, how much will J&J receive (ignoring issuance costs) when the bonds are first sold? A. $11,212 B. $12,393 C. $17,164 D. $18,880 E. $20,000 6. Suppose you purchase a zero coupon bond with face value $1,000, maturing in 20 years, for $214.51. What is the implicit interest, in dollars, in the first year of the bond's life? A. $14.86 B. $16.84 C. $17.16 D. $39.27 E. $80.00 7. Ted's Co. offers a zero coupon bond with an 11.3% yield to maturity. The bond matures in 16 years. What is the current price of a $1,000 face value bond? A. $178.78 B. $180.33 C. $188.36 D. $190.09 E. $192.18 8. A zero coupon bond with a face value of $1,000 is issued at an initial price of $375. The bond matures in 20 years. What is the implicit interest, in dollars, for the first year of the bond's life? A. $17.25 B. $18.85 C. $20.50 D. $21.20 E. $23.50 9. The semi-annual, ten-year bonds of Adep, Inc. are selling at par and have an effective annual yield of 4.295%. What is the amount of each interest payment on a $1,000 Adep bond? A. $21.25 B. $21.48 C. $21.50 D. $42.50 E. $42.95 10. The semiannual, 12-year bonds of Tracey United are selling at par and have an effective annual yield of 4.6529%. What is the amount of each interest payment if the face value of the bonds is $1,000? A. $22.50 B. $22.75 C. $23.00 D. $23.27 E. $23.50 11. Alpha Manufacturing offers a zero coupon bond with a 12.25% yield to maturity. The bond matures in 13 years. What is the current price if the face value is $1,000? A. $222.63 B. $234.18 C. $241.41 D. $243.06 E. $244.09 12. You plan on depositing $10,000 a year in real terms into your investment account for the next four years. The relevant nominal discount rate is 7.5% and the inflation rate is 4.2%. What are these deposits worth in today's dollars? A. $36,418.02 B. $36,787.78 C. $37,023.03 D. $38,021.21 E. $38,504.19 13. A $1,000 face value zero coupon bond is quoted at a price of 38.62. What is the amount you will pay to purchase this bond? A. $.39 B. $3.86 C. $38.62 D. $386.20 E. $1,038.62 14. Moltado Corporation is issuing a zero-coupon bond that will have a maturity of fifty years. The bond's par value is $1,000, and the current yield on similar bonds is 7.5%. Determine the value of the bond. A. $43.81 B. $42.71 C. $41.61 D. $40.51 E. $26.89 15. Suppose you purchase a zero coupon bond with face value $1,000, maturing in 20 years, for $214.51. If the yield to maturity on the bond remains unchanged, what will the price of the bond be five years from now? A. $315.20 B. $387.52 C. $410.91 D. $680.58 E. $1,000.00 16. You purchased an investment which will pay you $15,000, in real dollars, a year for the next three years. The nominal discount rate is 8% and the inflation rate is 3.6%. What is the present value of these payments? A. $41,431.91 B. $42,607.19 C. $43,333.33 D. $43,711.14 E. $44,008.16 17. A $1,000 face value zero coupon bond is quoted at a price of 43.30. What is the amount you would pay to purchase this bond ? A. $43.30 B. $430.30 C. $433.00 D. $956.70 E. $1,043.30 18. Today, you want to sell a zero coupon bond you currently own. The bond matures in 9 years. How much will you receive for your bond if the market yield to maturity is currently 8.88%? Ignore any accrued interest. A. $465.02 B. $468.10 C. $496.93 D. $676.39 E. $678.73 19. A corporate bond is quoted at a current price of 103.68. What is the market price if the face value is $5,000? A. $4,785.00 B. $4,822.53 C. $5,103.68 D. $5,184.00 E. $5,210.68 20. The bonds offered by Glenwood Studios are callable in 4 years at a quoted price of 106. What is the amount of the call premium on a $1,000 par value bond ? A. $30 B. $40 C. $50 D. $60 E. $70 21. This morning Tim purchased a 15-year, $1,000 face value zero coupon bond for $394.34. Assume the yield-to-maturity remains constant over the life of the bond. What price should Tim receive for his bond if he wants to sell it 4 years from today? A. $505.40 B. $515.60 C. $544.44 D. $555.85 E. $561.33 22. Party Time, Inc. has a 6% coupon bond that matures in 11 years. The bond pays interest semi-annually. What is the market price of a $1,000 face value bond if the yield to maturity is 12.9%? A. $434.59 B. $580.86 C. $600.34 D. $605.92 E. $947.87 23. This morning, Alicia bought a ten-year 7% coupon bond that pays interest annually. She paid $994 for a $1,000 bond. If the market interest rate on this type of bond declines to 6.5% tonight, how much will Alicia receive for her first interest payment? A. $32.31 B. $35.00 C. $65.00 D. $69.58 E. $70.00 24. You own two risky assets, both of which plot on the security market line. Asset A has an expected return of 12% and a beta of 0.8. Asset B has an expected return of 18% and a beta of 1.4. If your portfolio beta is the same as the market portfolio, what proportion of your funds are invested in asset A? A. 0.33 B. 0.50 C. 0.67 D. 1.33 E. 1.67 25. What is the portfolio beta if 25% of your funds are invested in the market portfolio, 25% in an asset with twice as much risk as the market portfolio, and the remainder in a risk-free asset? A. 0.25 B. 0.50 C. 0.75 D. 1.00 E. 1.25 26. What is the portfolio beta with 125% of your funds invested in the market portfolio via borrowing 25% of the funds at the risk-free interest rate? A. 0.25 B. 0.50 C. 0.75 D. 1.00 E. 1.25 27. What is the beta for a portfolio equally weighted in four assets: A, the market portfolio; B, which has half the risk of A; C, which has twice the risk of A; and D, which is risk-free? A. 0.500 B. 0.750 C. 0.875 D. 1.250 E. 1.375 28. Consider a portfolio made up of two risky assets and a risk-free asset. You invest 40% in asset A with a beta of 1.25 and 40% in asset B with a beta of 1.15. What is the beta of the portfolio? A. 0.84 B. 0.96 C. 1.03 D. 1.12 E. 1.20 29. Port Company is financed entirely by equity and has three divisions. Division A is the stable products division, and has a beta of 0.8. Division B takes only projects with the same risk as the market portfolio. Division C is the research and development division, where the average beta of projects taken is 1.6. The firm's assets are divided equally (both in terms of market value and book value) among the three divisions. What is the beta of the firm? A. 0.80 B. 1.00 C. 1.03 D. 1.13 E. 1.33 30. Your portfolio is comprised of 25% of stock X, 65% of stock Y, and 10% of stock Z. Stock X has a beta of .79, stock Y has a beta of 1.23, and stock Z has a beta of 1.47. What is the beta of your portfolio? A. .93 B. .99 C. 1.04 D. 1.09 E. 1.14 31. What is the beta of a portfolio comprised of the following securities? A. .98 B. 1.04 C. 1.09 D. 1.15 E. 1.32 32. Your portfolio is comprised of 30% of stock X, 50% of stock Y, and 20% of stock Z. Stock X has a beta of .64, stock Y has a beta of 1.48, and stock Z has a beta of 1.04. What is the beta of your portfolio? A. 1.01 B. 1.05 C. 1.09 D. 1.14 E. 1.18 33. You own a stock portfolio that is invested 10% in stock A, 30% in stock B, 40% in stock C, and 20% in stock D. These stocks have betas of 1.2, .8, 1.1, and 1.5, respectively. What is the beta of the portfolio? A. 1.04 B. 1.07 C. 1.10 D. 1.13 E. 1.14 34. You hold four stocks in your portfolio: A, B, C, and D. The portfolio beta is 1.20. Stock C comprises 40% of the dollar value of your holdings and has a beta of 1.60. If you sell all of your holdings in stock C, and replace it with an equal investment in stock E (which has a beta of 1.25), what will be your new portfolio beta? A. 1.00 B. 1.06 C. 1.12 D. 1.25 E. 1.32 35. What is the beta of the following portfolio? A. .98 B. 1.15 C. 1.19 D. 1.21 E. 1.23 36. You hold three stocks in your portfolio: A, B, and C. The portfolio beta is 1.50. Stock A comprises 20% of the dollar value of your holdings and has a beta of 1.0. If you sell all of your investment in A and invest the proceeds in the risk-free asset, your new portfolio beta will be: A. 0.850 B. 1.025 C. 1.200 D. 1.300 E. 1.625 37. What is the portfolio beta if 75% of your money is invested in the market portfolio, and the remainder is invested in a risk-free asset? A. 0.50 B. 0.25 C. 1.25 D. 1.00 E. 0.75 38. What is the value of systematic risk for a portfolio with 75% of the funds invested in A and 25% of the funds invested in B? A. 0.98 B. 1.13 C. 1.28 D. 1.40 E. 1.60 39. A portfolio has an expected return of 13.12%. The portfolio is comprised of 60% stock A and 40% stock B. The risk-free rate of return is 4% and the market risk premium is 8%. The beta of stock B is .87. What is the reward-to-risk ratio of stock A? A. 1.28 B. 1.32 C. 1.36 D. 1.41 E. 1.46 40. Asset A has an expected return of 15%. The expected market return is 14% and the risk-free rate is 4%. What is asset A's beta? A. 0.80 B. 1.10 C. 1.40 D. 1.80 E. 2.00 41. An investor has a portfolio with an expected return of 11.19%. The portfolio is evenly invested in a stock and a risk-free asset. The market has an expected return of 17% and the riskfree asset has an expected return of 3%. What is the beta of the stock? A. .98 B. 1.17 C. 1.43 D. 1.62 E. 1.94 42. The common stock of Cross Country Homes has an expected return of 15.18%. The return on the market is 11.6% and the risk-free rate of return is 4.3%. What is the beta of Cross Country Homes stock? A. 1.37 B. 1.42 C. 1.49 D. 1.51 E. 1.56 43. What is the standard deviation of a portfolio with weights of 60% in security A and the remainder in security B? A. 0.5% B. 0.9% C. 1.5% D. 2.3% E. 6.4% 44. Your portfolio has a beta of 1.08. The portfolio consists of 20% Treasury bills, 45% in stock A, and 35% in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B? A. .79 B. 1.25 C. 1.54 D. 1.61 E. 1.80 45. Seven months ago, you purchased 300 shares of Stadford, Inc. stock at a price of $48.30 a share. The company pays quarterly dividends of $.40 a share. Today, you sold all of your shares for $45.20 a share. What is your total percentage return on this investment? A. - 6.4% B. - 4.8% C. - 3.1% D. 8.1% E. 9.7% 46. You purchased 500 shares of a stock at a price of $22.50 per share. One year later, the shares sold for $21 each. At that end of the year, a $1.50 per share dividend was paid. What is the total dollar return for the investment? A. $0 B. $750 C. $1,250 D. $1,500 E. $1,750 47. You purchased 200 shares of preferred stock on January 1, 2002 for $42.27 per share. The stock pays an annual dividend of $7 per share. On December 31, 2002 the market price is $46.88 per share. What is your total dollar return for the year? A. $478 B. $922 C. $1,400 D. $2,322 E. $2,678 48. Six months ago, you purchased 1,300 shares of New Tech stock for $12.70 a share. You have received dividend payments equal to $.05 a share. Today, you sold all of your shares for $14.20 a share. What is your total dollar return on this investment? A. $650 B. $1,025 C. $1,885 D. $1,950 E. $2,015 49. One year ago, you purchased a stock at a price of $28.75. The stock pays quarterly dividends of $.35 per share. Today, the stock is worth $31.25 per share. What is the total amount of your capital gains to date from this investment? A. $0.70 B. $1.10 C. $1.40 D. $2.50 E. $3.90 50. Analog, Inc. stock is currently selling for $16.92 a share. The stock has a dividend yield of 1.3%. How much dividend income will you receive per year if you purchase 600 shares of this stock? A. $124.50 B. $127.46 C. $128.03 D. $129.11 E. $131.98 51. One year ago, you purchased a stock at a price of $32.50. The stock pays quarterly dividends of $.40 per share. Today, the stock is worth $34.60 per share. What is the total amount of your dividend income to date from this investment? A. $.40 B. $1.60 C. $2.10 D. $2.50 E. $3.70 52. A year ago, you purchased 200 shares of Holland Enterprises, Inc. stock at a price of $15.54 per share. The stock pays an annual dividend of $.20 per share. Today, you sold all of your shares for $17.70 per share. What is your total dollar return on this investment? A. $140 B. $160 C. $216 D. $432 E. $472 53. Eight months ago, Turner purchased 100 shares of Delta Frames stock at a price of $47.08 a share. Delta pays a quarterly dividend of $1.10 a share. Today, Turner sold all of his shares for $48.63 per share. What is Turner's total capital gain on this investment? A. $155 B. $180 C. $265 D. $360 E. $375 54. One year ago, you purchased a stock at a price of $32 a share. Today, you sold the stock and realized a total return of 25%. Your capital gain was $6 a share. What was your dividend yield on this stock? A. 1.25% B. 3.75% C. 6.25% D. 18.75% E. 21.25% 55. A stock had returns of 9%, -3%, 4%, and 15% over the past four years. What is the standard deviation of this stock for the past four years? A. 5.4% B. 5.9% C. 6.3% D. 6.6% E. 7.6% 56. Last year, Marsha purchased a stock at a price of $21.36 a share. Over the course of the year, she received $.60 in dividends per share while inflation averaged 3.2%. Today, Marsha sold her shares for $22.80 a share. What is Marsha's real rate of return on this investment? A. 5.85% B. 6.15% C. 6.30% D. 6.44% E. 6.51% 57. An investor purchases 500 shares of a company at a purchase price of $15.00 at the start of the year. During the year, the company paid out $0.50 of dividends per share. The investor then sells all the shares at a selling price of $13.50. Determine the investor's total percentage return. A. -5.67% B. -6.07% C. -6.37% D. -6.67% E. -7.07% 58. You purchased 200 shares of Hypex, Inc. stock for $38.12 a share. You have received a total of $290 in dividends and $8,130 in proceeds from selling the shares. What is your capital gains yield on this stock? A. 3.8% B. 4.2% C. 6.6% D. 8.0% E. 10.4% 59. Today, you sold 200 shares of SLG, Inc. stock. Your total return on these shares is 12.5%. You purchased the shares one year ago at a price of $28.50 a share. You have received a total of $280 in dividends over the course of the year. What is your capital gains yield on this investment? A. 4.80% B. 5.00% C. 6.67% D. 7.59% E. 11.67% 60. You purchased 300 shares of stock at a price of $35.86 per share. Over the last year, you have received total dividend income of $336. What is the dividend yield? A. 1.1% B. 3.1% C. 6.8% D. 9.4% E. 10.7% 61. An investor purchases 200 shares of a company at a purchase price of $30.00 at the start of the year. During the year, the company paid out $1.75 of dividends per share. The investor then sells all the shares at a selling price of $27.00. Determine the investor's total percentage return. A. -4.17% B. -5.55% C. -6.89% D. -7.38% E. -9.81% 62. The three probability ranges used with a normal distribution are defined as the _____ ranges. A. 75%, 85%, and 95% B. 68%, 75%, and 99% C. 68%, 85%, and 99% D. 68%, 85%, and 95% E. 68%, 95%, and 99% 63. A stock had returns of 8%, 11%, -2%, 5%, and 13% over the past 5 years, respectively. What is the geometric average rate of return for this time period? A. 6.73% B. 6.87% C. 7.13% D. 7.42% E. 7.89% 64. Destiny Corporation has experienced returns of 20%, -10%, 25% and -5% returns over the past four years. Given this information, calculate the company's geometric average returns. A. 6.42% B. 6.82% C. 7.22% D. 7.62% E. 8.02% 65. What are the geometric and arithmetic average returns for a stock with annual returns of 5%, 10%, -8%, and 16%? A. 5.37%; 5.75% B. 6.49%; 7.67% C. 7.22%; 5.75% D. 7.22%; 7.67% E. 9.68%; 5.75% 66. A stock had returns of 5%, 16%, - 10%, and 18% over the past four years. What is the geometric average return for this time period? A. 5.3% B. 6.6% C. 7.3% D. 9.7% E. 12.1% 67. Today, you sold 100 shares of Natural, Inc. stock. Your total return on these shares is 10.5%. You purchased the shares one year ago at a price of $25.75 a share. You have received a total of $110 in dividends over the course of the year. What is your capital gains yield on this investment? A. 6.23% B. 6.60% C. 7.77% D. 9.50% E. 9.75% 68. Last year, you purchased a stock at a price of $53.60 a share. Over the course of the year, you received $1.50 in dividends and inflation averaged 2.9%. Today, you sold your shares for $55.90 a share. What is your approximate real rate of return on this investment? A. 4.2% B. 7.1% C. 7.9% D. 8.6% E. 10.0% 69. What percentage of the population is represented within one standard deviation? A. 66% B. 68% C. 70% D. 72% E. 74% 70. Bianco Corporation has experienced returns of -5%, 20%, 10% and -8% returns over the past four years. Given this information, calculate the company's standard deviation. A. 13.12% B. 10.08% C. 8.02% D. 6.09% E. 5.89% 71. Eight months ago, you purchased 400 shares of Winston, Inc. stock at a price of $54.90 a share. The company pays quarterly dividends of $.50 a share. Today, you sold all of your shares for $49.30 a share. What is your total percentage return on this investment? A. -10.2% B. -9.3% C. -8.4% D. 12.0% E. 13.4% 72. You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year. What is the dividend yield for the investment? A. 4.4% B. 5.5% C. 8.5% D. 8.9% E. 9.7%. 73. You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year. What is the capital gains yield for the investment? A. 4.4% B. 5.5% C. 8.5% D. 8.9% E. 13.3% 74. You purchased a bond on January 1, 2002 for $839.67. The bond has a $1,000 face value, an 8% annual coupon, and can be sold for $822.33 on December 31, 2002. What is your percentage return on investment for the year? A. -2.1% B. 7.5% C. 8.6% D. 11.6% E. 11.8% 75. What are the arithmetic and geometric average returns for a stock with annual returns of 21%, 8%, -32%, 41%, and 5%? A. 5.6%; 8.6%. B. 5.6%; 6.3% C. 8.6%; 5.6% D. 8.6%; 8.6% E. 8.6%; 6.3% 76. You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year. What is the total percentage return for the investment? A. 5.5% B. 8.5% C. 8.9% D. 12.8% E. 13.3% 77. The common stock of Petersen and White Importers yielded returns of 42%, -5%, -18%, 9%, and 12% over the past 5 years, respectively. The arithmetic average return for this period of time is _____% while the geometric average return is _____%. A. 8; 6.19 B. 8; 7.01 C. 8; 7.80 D. 10; 9.20 E. 10; 9.84 78. An investor purchased a stock for $1.61 per share, held it for one year, and sold it for $3.03 a share. The stock did not pay a dividend. Inflation for that year was 3.2% and Treasury bills returned 3.7%. What is the real rate of return on this investment? A. 75.17% B. 82.36% C. 84.63% D. 85.00% E. 88.20% 79. Party Time, Inc. has a 6% coupon bond that matures in 11 years. The bond pays interest semi-annually. What is the market price of a $1,000 face value bond if the yield to maturity is 12.9%? A. $434.59 B. $580.86 C. $600.34 D. $605.92 E. $947.87 80. This morning, Alicia bought a ten-year 7% coupon bond that pays interest annually. She paid $994 for a $1,000 bond. If the market interest rate on this type of bond declines to 6.5% tonight, how much will Alicia receive for her first interest payment? A. $32.31 B. $35.00 C. $65.00 D. $69.58 E. $70.00 81. The Goodie Barn has a 7% coupon bond outstanding that matures in 13.5 years. The bond pays interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 14.78%? A. $255.27 B. $550.40 C. $674.66 D. $954.92 E. $967.38 82. You are purchasing a 30-year, zero coupon bond. The yield to maturity is 9.1% and the face value is $1,000. What is the current market price? A. $2.20 B. $69.27 C. $73.33 D. $263.20 E. $270.79 83. Sara wants to buy a zero coupon bond that will pay her $1,000 ten years from today. How much should Sara pay today to buy this bond if she wants to earn 7.5% on her investment? A. $485.19 B. $523.13 C. $750.00 D. $925.00 E. $1,000.00 84. Your firm offers a 10-year, zero coupon bond. The yield to maturity is 8.8%. What is the current market price of a $1,000 face value bond? A. $430.24 B. $473.26 C. $835.56 D. $919.12 E. $1,088.00 85. The bonds of Microhard, Inc. carry a 10% annual coupon, have a $1,000 face value, and mature in four years. Bonds of equivalent risk yield 15%. Microhard is having cash flow problems and has asked its bondholders to accept the following deal: The firm would like to make the next three coupon payments at half the scheduled amount, and make the final coupon payment be $250. If this plan is implemented, the market price of the bond will (rise/fall) to ___________. (Continue to assume a 15% required return.) A. $808.89 B. $828.85 C. $851.25 D. $865.45 E. $892.51 86. J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 7%. If the bond has a life of 30 years, pays annual coupons, and the yield to maturity is 6.8%, what is the present value of the bond's face value? A. $138.95 B. $241.15 C. $886.37 D. $1,000.00 E. $1,025.32 87. J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 7%. If the bond has a life of 30 years, pays annual coupons, and the yield to maturity is 6.8%, what is the total present value of the bond's coupon payments? A. $138.95 B. $241.15 C. $886.37 D. $921.12 E. $1,025.32 88. What would you pay for a bond that pays an annual coupon of $35, has a face value of $1,000, matures in seven years, and has a yield to maturity of 8%? A. $765.71 B. $875.34 C. $900.18 D. $910.14 E. $976.38 89. Westover Ridge offers a 9% coupon bond with semi-annual payments and a yield to maturity of 11.68%. The bonds mature in 16 years. What is the market price per bond if the face value is $1,000? A. $807.86 B. $863.08 C. $916.26 D. $1,453.10 E. $1,322.88 90. The Jaxson Company offers a 6% coupon bond with semi-annual payments and a yield to maturity of 7.27%. The bonds mature in 6 years. What is the market price of a $1,000 FV bond? A. $939.12 B. $939.97 C. $940.16 D. $940.89 E. $941.41 91. You purchase a bond with an invoice price of $960. The bond has a coupon rate of 5.5%, and there are three months to the next semi-annual coupon date. What is the clean price of the bond? A. $955.32 B. $951.15 C. $948.14 D. $946.25 E. $944.13 92. Bastion Corporation issued $100 million bonds that mature in 30 years and have a 5% coupon rate that is paid annually. If the bonds were sold to yield 5.4%, determine the price of the bonds at the end of year 5. A. $94,581,667 B. $95,500,206 C. $95,958,151 D. $97,606,824 E. $98,287,192 93. Bastion Corporation issued $100 million bonds that mature in 30 years and have a 5% coupon rate that is paid annually. If the bonds were sold to yield 5.4%, determine the price of the bonds at the end of year 15. A. $94,581,667 B. $95,500,206 C. $95,958,151 D. $97,606,824 E. $98,287,192 94. Bastion Corporation issued $100 million bonds that mature in 30 years and have a 5% coupon rate that is paid annually. If the bonds were sold to yield 5.4%, determine the price of the bonds at the end of year 25. A. $94,581,667 B. $95,500,206 C. $95,958,151 D. $97,606,824 E. $98,287,192 95. If the following bonds are identical except for coupon, what is the price of bond B? A. $901.04 B. $925.31 C. $960.44 D. $1,037.86 E. $1,079.63 96. Atlas Movers is issuing $1,000 face value zero coupon bonds at a quoted price of 38.70. What is the amount you would pay to purchase one of these bonds? A. $38.70 B. $387.00 C. $961.30 D. $1,000.00 E. $1,038.70 97. King Noodles' bonds have a 7.5% coupon rate. Interest is paid quarterly and the bonds have a maturity of eight years. If the appropriate discount rate is 8% on similar bonds, what is the price of King Noodles' bonds? A. $970.66 B. $970.87 C. $971.27 D. $989.63 E. $993.27 98. You purchase a bond with an invoice price of $988. The bond has a coupon rate of 7.4%, and there are five months to the next semiannual coupon date. What is the clean price of the bond? A. $981.83 B. $980.55 C. $978.14 D. $976.82 E. $974.65 99. Norwegian Adventures offers a 6.5% coupon bond with annual payments. The yield to maturity is 6.71% and the maturity date is 7 years from today. What is the market price of this bond if the face value is $1,000? A. $692.07 B. $811.63 C. $981.31 D. $988.57 E. $1,193.35 100. Canadian Treasury bills are yielding 2.63%. Inflation is 2.45%. What is the real rate of return on the Treasury bill? A. -0.18% B. 0.18% C. 0.36% D. 0.67% E. 1.80% 101. The Fisher formula is expressed as: A. 1 + r = (1 + R) (1 + h) B. 1 + r = (1 + R) (1 + h) C. 1 + h = (1 + r) (1 + R). D. 1 + R = (1 - r) (1 + h) E. 1 + R = (1 +r) (1 + h). 102. One basis point is equal to: A. .01%. B. .10%. C. 1.0%. D. 10%. E. 100%. 103. What is the duration of a zero coupon bond with five years to maturity that is currently priced at $980 and has an interest rate of 8%? A. 4.86 years B. 2.5 years C. 10 years. D. 5 years E. Cannot be determined with the information provided. 104. Which bond would most likely possess the highest degree of interest rate risk? A. 8% coupon rate, 10 years to maturity B. 8% coupon rate, 20 years to maturity C. 10% coupon rate, 10 years to maturity D. 10% coupon rate, 20 years to maturity E. 12% coupon rate, 20 years to maturity 105. J&J Enterprises wants to issue 20-year, $1,000 face value zero-coupon bonds. If each bond is to yield 8%, what is the minimum number of bonds J&J must sell if they wish to raise $2 million from the sale? (Use values in the dollar) (Ignore issuance costs.) A. 4,290 B. 9,322 C. 10,164 D. 13,880 E. 16,159 106. You presently own stock that you purchased one year ago. Your return on the stock for the past year was 25%. You calculate your real return on investment was 13.63%. The rate of inflation must have been __________. A. 1.1% B. 3.6% C. 10.0% D. 25.0% E. 42.0% 107. Winston Enterprises has a 15-year bond issue outstanding that pays a 9% coupon. The bond is currently priced at $894.60 and has a par value of $1,000. Interest is paid semi-annually. What is the yield to maturity? A. 8.67% B. 10.13% C. 10.16% D. 10.40% E. 10.45% 108. Calculate the nominal rate of interest given a real rate of 8% and an inflation rate of 2%. A. 10.75% B. 10.48% C. 10.16% D. 10.01% E. 9.86% 109. A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000. What is the change in the price of this bond if the market yield rises to 6% from the current yield of 4.5%? A. 11.11% decrease B. 12.38% decrease C. 12.38% increase E. 14.13% increase D. 14.13% decrease 110. XYZ Co. zero-coupon bonds have a face value of $1,000 and mature in 18 years. They currently sell for $179.86 today. By what percentage will the market price rise if the market's required return falls by half? A. 99% B. 131% C. 137% D. 175% E. 231% 111. The zero coupon bonds of Markco, Inc. have a market price of $394.47, a face value of $1,000, and a yield to maturity of 6.87%. How many years is it until this bond matures? A. 7 years B. 10 years C. 14 years D. 18 years E. 21 years 112. The zero coupon bonds of Casper, Inc., have a market price of $267.80, a face value of $1,000, and a yield to maturity of 8.87%. How many years is it until these bonds mature? A. 13.85 years B. 14.45 years C. 14.95 years D. 15.50 years E. 16.30 years 113. Six Days, Inc., has a 7%, semi-annual coupon bond with a current market price of $1,010.40. The bond has a par value of $1,000 and a yield to maturity of 6.87%. How many years is it until this bond matures? A. 10.67 years B. 11.81 years. C. 15.98 years D. 22.07 years E. 23.62 years 114. Dizzy Corp. bonds bearing a coupon rate of 15%, pay coupons semiannually, have two years remaining to maturity, and are currently priced at $980 per bond. What is the yield to maturity? A. 15.00% B. 15.99% C. 16.21% D. 16.25% E. 16.57% 115. Zane Industrial Products wants to raise $22 million to expand their business. To accomplish this, they plan to sell 30-year, $1,000 face value, zero coupon bonds. The bonds will be priced to yield 7.25%. What is the approximate minimum number of bonds the company must sell to raise the money they need (use values in the dollar)? A. 155,400 B. 161,333 C. 168,242 D. 174,198 E. 179,615 116. Beach Combers International has 5.75% coupon bonds outstanding with a current market price of $689.40. The yield to maturity is 11.20% and the face value is $1,000. Interest is paid semiannually. How many years is it until these bonds mature? A. 8.64 years B. 9.33 years C. 18.66 years D. 23.25 years E. 37.32 years 117. Tri-County Hauling has bonds outstanding that pay a 6% coupon, have a 5.47% yield to maturity, and a face value of $1,000. The current rate of inflation is 3.2%. What is the real rate of return on these bonds? A. 0.53% B. 2.20% C. 2.27% D. 2.71% E. 2.80% 118. A 15-year, 6% coupon bond pays interest annually. The bond has a face value of $1,000. What is the change in the price of this bond if the market yield to maturity rises to 6.5% from the current rate of 6.25%? A. 2.37% decrease B. 2.43% decrease C. 2.37% increase E. 2.43% increase D. 2.50% decrease 119. A bond that pays interest annually yields a 6.875% rate of return. The inflation rate for the same period is 4.35%. What is the real rate of return on this bond? A. 2.38% B. 2.42% C. 2.53% D. 2.61% E. 2.64% 120. The current real rate is 1.25% and the inflation rate is 1.40%. What rate would you expect to see on a Treasury bill? A. 1.75% B. 2.65% C. 2.67% D. 2.71% E. 2.73% 121. Year Average Credit Sales = $180,000 COGS = $135,000 — How many days are in the accounts receivable period? A. 28 days B. 31 days C. 59 days D. 62 days E. 90 days 122. Year Average Credit Sales = $180,000 COGS = $135,000 —How many days are in the operating cycle? A. 28 days B. 31 days C. 59 days D. 62 days E. 90 days 123. Year Average Credit Sales = $180,000 COGS = $135,000 — How many days are in the accounts payable period? A. 28 days B. 31 days C. 59 days D. 62 days E. 90 days 124. Year Average Credit Sales = $180,000 COGS = $135,000 — How many days are in the cash cycle? A. 28 days B. 31 days C. 59 days D. 62 days E. 90 days 125. Center Enterprises currently has an operating cycle of 58 days. You are analyzing some operational changes which are expected to increase the accounts receivable period by 4 days and decrease the inventory period by 3 days. The accounts payable turnover rate is expected to increase from 9 to 12 times per year. If all of these changes are adopted, what will Center's new operating cycle be? A. 56 days B. 57 days C. 59 days D. 60 days E. 65 days 126. Blackberry, Inc. had sales for the past year of $38,250 and cost of goods sold of $21,038. In addition, the statement of financial position accounts was as shown in the table below. Blackberry uses average account values and a 365-day year where applicable in all of its computations. What is the operating cycle for Blackberry, Inc.? A. 57.70 days B. 58.50 days C. 59.40 days D. 62.03 days E. 65.11 days 127. The Friendly Bank offers AB United a $200,000 line of credit with an interest rate of 2.25% per quarter. The credit line also requires that 2% of the unused portion of the credit line be deposited in a non-interest bearing account as a compensating balance. AB United's short-term investments are paying 1.5% per quarter. What is the effective annual interest rate on this arrangement if the line of credit goes unused all year? Assume any funds borrowed or invested use compound interest. A. 5.92% B. 6.00% C. 6.08% D. 6.14% E. 6.19% 128. Paul's Manufacturing has sales of $810,000. The cost of goods sold is equal to 80% of sales. The firm has an average inventory of $11,500. How many days on average does it take the firm to sell its inventory? A. 3.24 days B. 5.18 days C. 6.48 days D. 56.35 days E. 70.43 days 129. A company has a $20 million operating loan credit with its bank at a rate of 0.55% per month. What is the effective rate of the operating loan? A. 6.68% B. 6.74% C. 6.80% D. 6.98 % E. 7.02% 130. [Each transaction takes place at the end of the business day.] How many days are in the operating cycle? A. 46 days B. 57 days C. 61 days D. 72 days E. 118 days 131. [Each transaction takes place at the end of the business day.] How many days are in the inventory period? A. 46 days B. 57 days C. 61 days D. 72 days E. 118 days 132. [Each transaction takes place at the end of the business day.] How many days are in the accounts receivable period? A. 46 days B. 57 days C. 61 days D. 72 days E. 118 days 133. [Each transaction takes place at the end of the business day.] How many days are in the accounts payable period? A. 46 days B. 57 days C. 61 days D. 72 days E. 118 days 134. [Each transaction takes place at the end of the business day.] How many days are in the cash cycle? A. 46 days B. 57 days C. 61 days D. 72 days E. 118 days 235. Year Average Credit Sales = $180,000, COGS = $135,000 How many days are in the receivables period? A. 47 days B. 57 days C. 62 days D. 73 days E. 91 days 136. What is Ned's cash cycle at the end of the first quarter? A. 40 days B. 55 days C. 65 days D. 85 days E. 220 days 237. Keyser Metal Fabricators collects 25% of sales in the month of sale, 65% in the month following the month of sale, and the 10% in the second month following the month of sale. In August, Keyser will collect _____ sales. A. 65% of June. B. 10% of August. C. 65% of July. D. 25% of June. E. 10% of May. 138. Dallas and More (D&M) sells its inventory in 82 days on average. Its average customer charges his purchase on a credit card whereby payment is received in ten days. On the other hand, D&M takes 56 days on average to pay for its purchases. Given this information, what is the length of D&M's operating cycle? A. 26 days B. 36 days C. 66 days D. 92 days E. 128 days 139. What is the length of the cash cycle? A. 51 days B. 60 days C. 66 days D. 69 days 140. For the year just ended, James' Drafting Supplies had average accounts receivable of $880,000 and total credit sales of $4,800,000. Throughout the year, a factor purchased accounts receivable from the firm at a 2% discount. What was the firm's days in receivables? A. 61 days B. 65 days C. 67 days D. 71 days E. 74 days 141. A firm has sales of $720,000. The cost of goods sold is equal to 70% of sales. The firm has an average inventory of $6,500. How many days on average does it take the firm to sell its inventory? A. 3.30 days B. 4.71 days C. 67.29 days D. 77.54 days E. 110.77 days 143. Joe's Merchandise had a beginning accounts payable balance of $61,800 and an ending accounts payable balance of $67,400. Sales for the period were $580,000 and costs of goods sold were $436,000. What is the payables turnover rate? A. 6.47 times B. 6.75 times C. 7.02 times D. 8.60 times E. 8.98 times 144. What is the inventory turnover? A. 6.6 times B. 7.1 times C. 7.8 times D. 8.9 times E. 10.5 times 145. Cailey's Shoppe has an inventory period of 37 days, an accounts payable period of 44 days, and an accounts receivable period of 25 days. Management is considering an offer from their suppliers to pay within 15 days and receive a 7% discount. If the new discount is taken, the accounts payable period is expected to decline by 10 days. If the new discount is taken, the operating cycle will be _____ days. A. 52 B. 62 C. 71 D. 79 E. 91 146. For the year just ended, James' Drafting Supplies had average accounts receivable of $880,000 and total credit sales of $4,800,000. Throughout the year, a factor purchased accounts receivable from the firm at a 2% discount. If the firm wishes to get its factoring costs below 11%, what is the MAXIMUM days in receivables it can have? A. 67 days B. 70 days C. 72 days D. 75 days E. 87 days D. 87 days E. 92 days D. 80 days E. 82 days 147. Year Average Credit Sales = $180,000 COGS = $135,000 — How many days are in the inventory period? A. 59 days B. 62 days C. 78 days 148. Credit Sales = $175,000 COGS = $125,000 How many days are in the inventory period? A. 56 days B. 58 days C. 79 days 149. Barkely's has a line of credit with a local bank in the amount of $125,000. The loan agreement calls for interest of 8% with a compensating balance of 4%, which is based on the total amount borrowed. The compensating balance will be deposited into an interest-free account. What is the effective interest rate on the loan if the firm needs to borrow $58,000 for one year to cover operating expenses? A. 7.68% B. 7.81% C. 8.00% D. 8.17% E. 8.33% 150. True Blue Stores had a beginning accounts payable balance of $56,900 and an ending accounts payable balance of $62,800. Sales for the period were $670,000 and costs of goods sold were $418,000. What is the payables turnover rate? A. 6.98 times B. 7.35 times C. 8.13 times D. 11.19 times E. 11.78 times 151. Which of the following is a legitimate reason the valuation of common stock is generally harder than the valuation of bonds? I. II. III. Future cash flows on stocks are not known in advance. Common stocks don't have a maturity date. Common stock valuation is sensitive to estimates of the dividend growth rate. 1. 2. 3. 4. 5. A) B) C) D) E) I only I and II only I and III only II and III only I, II, and III 152. Parts of the indenture limiting certain actions that might be taken during the term of the loan (usually to protect the interests of the lender) are called: 1. 2. 3. 4. 5. Trustee relationships. Sinking funds provisions. Bond ratings. Deferred call provisions. Protective covenants. 153. The relationship between nominal interest rates on default-free, pure discount securities and the time to maturity is called the: A. liquidity effect. B. Fisher effect. C. term structure of interest rates. D. inflation premium. E. interest rate risk premium. 154. The semi-annual, 8 percent coupon bonds of Merriweather, Inc. are selling at par. The effective annual rate of these bonds must be equal to: A. 4 percent. B. (1.04)2 – 1. C. 8 percent. D. (1.08)2 – 1. E. (1.04 x 2) – 1. 155. You are planning to save your Christmas bonuses from work and are comparing savings accounts: Account A compounds semi-annually while account B compounds monthly. If both accounts have the same effective annual rate of interest and you place only the bonuses in the account, you should choose ___________. A. account A because it has a higher APR B. account B because it has a higher APR C. account B because it is compounded more often D. account A because you will pay less in taxes E. either since you would be indifferent between the two 156. The ABC Co. has paid annual dividends of $0.30, $0.64, $1.20, and $1.45 over the past four years. Dividends in the future are expected to grow at a constant rate of 3.5%. Which one of the following formulas should be used to compute the value of the stock today? A. P0 = D1 / (1 + r)1 + D2 / (1 + r)2 ... + Dn / (1 + r)n + Pn / (1 + r)n B. P0 = D / r C. P0 = D1 / (1 + r)n + g D.P0 =D1 /(r-g) E. P0 = D1 / (r - g)n 157. Which of the following is true about the differences between debt and common stock? 1. 2. 3. 4. 5. 158. Debt is ownership in a firm but equity is not. Creditors have voting power while stockholders do not. Periodic payments made to either class of security are tax deductible for the issuer. Interest payments are promised while dividend payments are not. Bondholders can also own equity, but not vice versa. Equity with priority for dividends and in the event of bankruptcy is called: A. Dual class stock. B. Cumulative stock. C. Deferred stock. D. Preferred stock. E. Common stock. 159. A negative net float indicates that: A. your disbursement float is greater than your collection float. B. the available balance exceeds the book balance. C. your outstanding cheques exceed your uncollected deposits. D. the bank has received a direct deposit which is not recorded in your chequebook. E. the amount which you can spend is less than the balance appearing in your chequebook. 160. The average daily float is equal to: A. the daily book balance - daily available balance. B. the average daily receipts weighted average delay. C. the total collection float for the month 30. D. average net float number of days in the period. E. average daily collection amount the processing delay. 161. Which one of the following will decrease a firm's collection time? A. encouraging customers to use debit cards rather than cheques B. having payments from all locations mailed directly to the head office rather than to local post office boxes C. recording payments to customer accounts before depositing the cheques D. using a bank in a remote location as your primary bank E. assigning a single employee to open the mail and prepare the deposits rather than using a team approach 162. If Russian Motors closed at $22 and the current quarterly dividend is $1.25, what% yield would be reported in The National Post? A. 5.7% B. 6.5% C. 9.1% D. 22.2% E. 22.7% 163. You are considering purchasing stock S. This stock has an expected return of 8% if the economy booms and 3% if the economy goes into a recessionary period. The overall expected rate of return on this stock will: A. be equal to one-half of 8% if there is a 50% chance of an economic boom. B. vary inversely with the growth of the economy. C. increase as the probability of a recession increases. D. be equal to 75% of 8% if there is a 75% chance of a boom economy. E. increase as the probability of a boom economy increases. Which of the following statements concerning non-diversifiable risk are correct? I. Non-diversifiable risk is measured by standard deviation. II. Systematic risk is another name for non-diversifiable risk. III. The risk premium increases as the nond-iversifiable risk increases. IV. Non-diversifiable risks are those risks you cannot avoid. A. I and III only B. II and IV only C. I, II, and III only D. II, III, and IV only E. I, II, III, and IV 164. The expected return on a portfolio: A. can be greater than the expected return on the best performing security in the portfolio. B. can be less than the expected return on the worst performing security in the portfolio. C. is independent of the performance of the overall economy. D. is limited by the returns on the individual securities within the portfolio. E. is an arithmetic average of the returns of the individual securities when the weights of those securities are unequal. 165. If a stock portfolio is well diversified, then the portfolio variance: A. will equal the variance of the most volatile stock in the portfolio. B. may be less than the variance of the least risky stock in the portfolio. C. must be equal to or greater than the variance of the least risky stock in the portfolio. D. will be a weighted average of the variances of the individual securities in the portfolio. E. will be an arithmetic average of the variance of the individual securities in the portfolio. 166. Which one of the following statements is correct concerning the standard deviation of a portfolio? A. The greater the diversification of a portfolio, the greater the standard deviation of that portfolio. B. The standard deviation of a portfolio can often be lowered by changing the weights of the securities in the portfolio. C. Standard deviation is used to determine the amount of risk premium that should apply to a portfolio. D. Standard deviation measures only the systematic risk of a portfolio. E. The standard deviation of a portfolio is equal to a weighted average of the standard deviations of the individual securities held within the portfolio. 167. Which of the following would increase a portfolio's systematic risk? I. II. III. Common stock is sold and replaced with Treasury bills. Stocks with a beta equal to the market beta are added to a portfolio of Treasury bills. Low-beta stocks are sold and replaced with high-beta stocks. 1. 2. 3. 4. 5. A) B) C) D) E) I only II only III only I and II only II and III only 168. Systematic risk is measured by _____ and represents risk which _____ be eliminated by diversification. 1. 2. 3. 4. 5. A) B) C) D) E) beta; can beta; can not standard deviation; can standard deviation; can not standard deviation; may or may not 169. You discover that you can make greater than expected returns by buying stock in firms whenever the growth rate in sales predicted by an investment survey exceeds the stock's current price-earnings ratio. Which of the following describes this event? A) B) C) D) E) This would not be a violation of market efficiency. This would be a violation of weak form efficiency. This would be a violation of semi-strong form efficiency but not of weak form efficiency. This would be a violation of strong form efficiency but not of semi-strong form efficiency. This would be a violation of all forms of market efficiency. 169. Credit Sales = $175,000 COGS = $125,000 How many days are in the operating cycle? A. 118 days B. 123 days C. 125 days D. 127 days E. 135 days 170. Your firm collects 30% of sales in the month of sale, 55% of sales in the month following the month of sale and 13% of sales in the second month following the month of sale. Given this, you will collect _____ sales during the month of June. A. 30% of May B. 55% of June C. 13% of May D. 55% of May E. 13% of March 171. A national firm has sales of $575,000 and cost of goods sold of $368,000. At the beginning of the year, the inventory was $42,000. At the end of the year, the inventory balance was $45,000. What is the inventory turnover rate? A. 8.46 times B. 12.78 times C. 13.22 times D. 28.56 times E. 43.14 times 172. Drefus, Inc. has an inventory turnover of 15 and an accounts receivable turnover of 9. The accounts payable period is 51 days. What is the length of the cash cycle? A. 13.89 days. B. 14.07 days C. 14.23 days D. 18.79 days E. 23.00 days 173. Your firm has sales of $879,000 and cost of goods sold of $568,000. At the beginning of the year, your inventory was $38,000. At the end of the year, the inventory balance was $43,000. What is the inventory turnover rate? A. 14.02 times. B. 14.95 times C. 15.19 times. D. 20.44 times E. 21.70 times 174. Haywood Paints has a 45 day collection period. Therefore they will collect _____ days of May sales, _____ days of June sales, and _____ days of July sales in the month of July. A. 0; 15; 30 B. 0; 15; 15 C. 15; 15; 0 D. 15; 30; 0 E. 0; 30; 0 175. Delta Motors has sales of $521,000. The cost of goods sold is equal to 63% of sales. The firm has an average inventory of $22,800. How many days on average does it take the firm to sell its inventory? A. 15.97 days B. 16.08 days C. 17.47 days D. 25.35 days E. 26.14 days 176. Your firm has sales of $628,000 and cost of goods sold of $402,000. At the beginning of the year, your inventory was $31,000. At the end of the year, the inventory balance was $33,000. What is the inventory turnover rate? A. 11.23 times B. 12.56 times C. 18.60 times D. 19.63 times E. 29.06 times 177. Blackberry, Inc. had sales for the past year of $38,250 and cost of goods sold of $21,038. In addition, the statement of financial position accounts was as shown in the table below. Blackberry uses average account values and a 365-day year where applicable in all of its computations. What is the accounts receivable period for Blackberry, Inc.? A. 15.75 days B. 16.46 days C. 18.98 days D. 22.17 days E. 23.18 days 178. Tops, Inc. has sales of $705,000. The cost of goods sold is equal to 60% of sales. The beginning accounts receivable balance is $33,000 and the ending accounts receivable balance is $36,000. How long on average does it take the firm to collect its receivables? A. 12.26 days B. 17.86 days C. 19.58 days D. 20.44 days E. 29.77 days 179. Wislon, Inc. has an inventory turnover rate of 15, an accounts payable period of 54 days and an accounts receivable period of 37 days. What is the length of the cash cycle? A. -7.33 days B. -2.00 days C. 2.00 days D. 6.50 days E. 7.33 days 180. LoDo, Inc. has sales of $642,000 and average accounts payable of $36,400. The cost of goods sold is equivalent to 65% of sales. How long does it take LoDo to pay its suppliers? A. 11.46 days B. 13.45 days C. 20.69 days D. 26.18 days E. 31.84 days 181. BiltRite, Inc. has sales of $610,000. The cost of goods sold is equal to 70% of sales. The beginning accounts receivable balance is $21,000 and the ending accounts receivable balance is $25,000. How long on average does it take the firm to collect its receivables? A. 13.76 days B. 14.09 days C. 21.07 days D. 25.98 days E. 26.52 days 182. Year Average Credit Sales = $180,000 COGS = $135,000 How many days are in the payables period? A. 11 days B. 20 days C. 22 days D. 25 days E. 30 days 183. Tippler, Inc. has sales of $468,000, average accounts receivable of $27,500, and average accounts payable of $22,300. The cost of goods sold is equivalent to 75% of sales. How long does it take Tippler to pay their suppliers? A. 12.76 days B. 17.39 days C. 23.19 days D. 25.89 days E. 28.60 days 184. Webster, Inc. has sales of $267,000, costs of goods sold of $149,000, and average accounts receivable of $18,400. On average, how long does it take its credit customers to pay for their purchases? A. 8.10 days B. 14.51 days C. 25.15 days D. 38.81 days E. 45.07 days 185. Beckwith Upholstery has sales of $930,000 and cost of goods sold of $590,000. The firm had a beginning inventory of $43,000 and an ending inventory of $41,000. What is the length of the inventory period? A. 16.48 days B. 16.88 days C. 25.36 days D. 25.98 days E. 26.60 days 186. Rocky Mountain Homes has sales of $1.45 million and average accounts payable of $74,400. The cost of goods sold is equivalent to 80% of sales. How long does it take Rocky Mountain to pay its suppliers? A. 23.41 days B. 24.01 days C. 25.38 days D. 27.99 days E. 29.26 days 187. Evans, Inc. has an inventory period of 36 days, an accounts payable period of 44 days, and an accounts receivable turnover rate of 20. What is the length of the cash cycle? A. 10.25 days B. 12.00 days C. 26.25 days D. 60.00 days E. 61.75 days 188. Symphony Instruments, Inc. has sales of $760,000 and cost of goods sold of $520,000. The firm had a beginning inventory of $39,000 and an ending inventory of $48,000. What is the length of the inventory period? A. 11.95 days B. 20.89 days C. 27.38 days D. 30.53 days E. 33.69 days 189. Weavers, Inc. has an inventory turnover of 22 and an accounts payable turnover of 13. The accounts receivable period is 39 days. What is the length of the cash cycle? A. -4.00 days B. 5.67 days C. 27.51 days D. 48.00 days E. 50.49 days 190. Credit Sales = $175,000 COGS = $125,000 How many days are in the payables period? A. 21 days B. 24 days C. 28 days D. 35 days E. 41 days 190. Banner Corporation will not pay dividends until year 3, whereby it is expected to pay $5 in dividends. Dividends are then expected to grow at 20%, 10% and 5% in years 4, 5 and 6. Afterwards, dividend growth will stabilize to 2% consistently. If the rate of return is 10%, determine the stock price now. A. $66.77 B. $65.77 C. $64.77 D. $63.77 E. $62.77 191. The dividend on Simple Motors common stock will be $2 in one year, $3.50 in two years, and $5.00 in three years. You can sell the stock for $75 in three years. If you require a 10% return on your investment, how much would you be willing to pay for a share of this stock today? A. $59.69 B. $64.65 C. $64.82 D. $65.66 E. $71.30 192. KB Adventures will pay an annual dividend of $3.15 a share on their common stock next week. Last year, the company paid a dividend of $3.00 a share. The company adheres to a constant rate of growth dividend policy. What will one share of this common stock be worth ten years from now if the applicable discount rate is 12.5%? A. $42.00 B. $56.78 C. $65.16 D. $68.41 E. $71.83 193. Elegante Homes stock traditionally provides a 16% rate of return. The company just paid an annual dividend of $3.20 a share and is expected to increase that amount by 5% per year. If you are planning to buy 1,000 shares of this stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 9% at the time of your purchase? A. $30.55 B. $32.07 C. $67.20 D. $80.00 E. $88.20 194. If a company has a current stock price of $78, an EPS of $1.10/share; EPS growth rate of 20% and the investors rate of return is 11.50%, calculate the NPVGO. A. $67.43 B. $68.43 C. $69.43 D. $70.43 E. $71.43 195. Tarp Corporation is a young start-up company. No dividends will be paid over the next ten years because the firm needs to plow back its earnings to fuel growth. The company will pay $3 per share dividend in year 11 and will increase the dividend by 6% per year thereafter. If the required return on this stock is 15%, what is the current share price? A. $7.24 B. $7.54 C. $7.84 D. $8.04 E. $8.24 196. Banner Corporation will not pay dividends until year 3, whereby it is expected to pay $5 in dividends. Dividends are then expected to grow at 20%, 10% and 5% in years 4, 5 and 6. Afterwards, dividend growth will stabilize to 2% consistently. If the rate of return is 10%, determine the stock price next year. A. $71.35 B. $71.85 C. $72.31 D. $72.85 E. $73.35 197. Hilltop Markets will pay an annual dividend of $2.73 a share on its common stock next week. Last year, the company paid a dividend of $2.60 a share. The company adheres to a constant rate of growth dividend policy. What will one share of B&K common stock be worth 5 years from now if the applicable discount rate is 9.5%? A. $77.43 B. $78.97 C. $79.00 D. $79.67 E. $81.30 198. Super Sounds is expecting a period of intense growth and has decided to retain more of their earnings to help finance that growth. As a result, they are going to reduce the annual dividend by 20% a year for the next three years. After that they will maintain a constant dividend of $1 a share. Last year, the company paid $2.25 as the annual dividend per share. What is the market value of this stock if the required rate of return is 16%? A. $6.63 B. $7.36 C. $8.08 D. $9.61 E. $11.23 199. Biogenetics, Inc. plans to retain and reinvest all of its earnings for the next 30 years. Beginning in year 31, the firm will begin to pay a $12 per share dividend. The dividend will not subsequently change. Given a required return of 15%, what should the stock sell for today? A. $1.21 B. $2.15 C. $8.15 D. $42.00 E. $80.00 200. Suppose that sales and profits of Oly Enterprises are growing at a rate of 30% per year. At the end of four years the growth rate will drop to a steady 4%. At the end of year 5, Oly will issue its first dividend in the amount of $2 per share. If the required return is 16%, what is the value of a share of stock? Assume dividends grow at the same rate as earnings after year 4. A. $7.49 B. $7.67 C. $8.17 D. $9.20 E. $9.91