Overview
1. You have just taken out a $500,000 30-year home mortgage loan with a 7.5% interest rate and monthly payments. However, you are considering paying off the mortgage in 15 years. If you pay the mortgage off in 15 years, how much money will you save compared to paying the mortgage off in 30 years?
$591,831
$309,945
$424,275
$384,583
$198,843
2. _____has to do with the speed and accuracy of processing a buy or sell order at the best available price.
Operational efficiency
Informational efficiency
Strong-form efficiency
Semi-strong efficiency
Weak-form efficiency
3. Which 10-year time period had the highest interest rates in modern US history?
1985-1995
1975-1985
1965-1975
2005-2015
1995-2005
4. If 10 year Treasury bonds are yielding 5% and 2-year Treasury bonds are yielding 3%, then the yield curve is
and economic growth is likely to
Flat, remain the same
Upward sloping, accelerate
Inverted, weaken
Inverted, accelerate
Upward sloping, weaken
5. TravelEasy Inc. has issued 30-year semiannual coupon bonds with a face value of $1,000. These bonds are currently selling for $1,543. 19. If the current yield to maturity is 9.5%, what is the coupon rate on these bonds? Round to the nearest percent.
12%
11%
14%
15%
13%
6. A corporation is scheduled to produce a line of products for the next ten years and then go out of business.
The firm will pay an annual dividend of $1.75 for only those ten years. What is the present value of a share for this company if we want an 8% annual return on the stock?
$11.74
$14.97
$12.97
$12.33
$15.97
7. Quality Production Products Inc. has issued 30-year semiannual coupon bonds with a face value of $1,000.
If the coupon rate is 10% and the current yield to maturity is 8%, what is the firm's current price per bond?
$1.226.24
$1,000.00
S1,240.54
$1,192.35
$1,362.74
8. As the rating of a bond decreases (for example, from A, to B, to C), it generally means that
The credit rating increases, the default risk increases, and the required rate of return decreases
) the credit rating decreases, the default risk increases, and the required rate of return decreases
the credit rating decreases, the default risk decreases, and the required rate of return decreases
the credit rating deceases, the default risk increases, and the required rate of return increases
the credit rating increases, the default risk decreases, and the required rate of return increases
9. You put 20% down on a home with a purchase price of $500,000. The down payment is thus $100,000, leaving a balance owed of $400,000. A bank will loan you this remaining balance ($400,000) at 6.90% APR.
You will make monthly end-of-the-period payments with a 30-year payment schedule. What is the monthly payment under this schedule?
$2,634.4
$2,345.25
$2.465.5
$2,270.5
$2.575.3