1. Sue now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?,,a. $205.83,b. $216.67,c. $228.07,d. $240.08 ,e. $252.08,,2. How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?,,a. $438.03,b. $461.08,c. $485.35,d. $510.89,e. $537.78 ,,3. Suppose the U.S. Treasury offers to sell you a bond for $747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? ,,a. 4.37%,b. 4.86%,c. 5.40%,d. 6.00% ,e. 6.60%,,4. Bob has $2,500 invested in a bank that pays 4% annually. How long will it take for his funds to double?,,a. 14.39,b. 15.15,c. 15.95,d. 16.79,e. 17.67 ,,5. You want to buy a new sports car 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?,,a. $11,973,b. $12,603,c. $13,267 ,d. $13,930,e. $14,626,,,6. Morin Company’s bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 8.2% on these bonds. What is the bond’s price?,,a. $903.04 ,b. $925.62,c. $948.76,d. $972.48,e. $996.79,,7. Adams Enterprises’ noncallable bonds currently sell for $1,120. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity? , ,a. 5.84%,b. 6.15%,c. 6.47%,d. 6.81%,e. 7.17% ,,8. Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 8.4% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?,,a. $1,105.69 ,b. $1,133.34,c. $1,161.67,d. $1,190.71,e. $1,220.48,,9. Grossnickle Corporation issued 20-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 19 years to maturity? ,,a. $1,113.48,b. $1,142.03,c. $1,171.32,d. $1,201.35 ,e. $1,232.15 ,,10. Malko Enterprises’ bonds currently sell for $1,050. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield?,,a. 7.14% ,b. 7.50%,c. 7.88%,d. 8.27%,e. 8.68%,
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