The rate that a risk-free security would pay if no inflation were expected over its holding period is called the _______ rate.
A. prime
B. nominal
C. term structure
D. real risk-free
According to the Rule of 72, approximately what interest rate is earned when an investment doubles over 4 years?
A. 19 percent
B. 6 percent
C. 12 percent
D. 24 percent
Year-to-date, Company A has earned a 5.90 percent return. During the same period, Company B has earned 8.65 percent, and Company C has earned 14.30 percent. What's your portfolio return if you have a portfolio made up of the following?
45 percent Company A
35 percent Company B
20 percent Company C
A. 9.38
B. 5.42
C. 13.41
D. 8.54
A deposit of $1,460 earns the following interest rates: 7 percent in year one, 6.5 percent in year two, 6 percent in year three, and 5 percent in year four. What would be the future value for year four?
A. $1,851.75
B. $1,825.48
C. $1,885.55
D. $1,925.37
You're valuing Horn of Plenty Mining, Inc.'s, stock in order to compare its value to its market price. You believe that the company will pay total dividends of $1.45 in 2015 and $1.56 in 2016. You also believe the company's stock price will be $35.80 at the end of 2016. If the appropriate discount rate is 12 percent, what's the value of Horn of Plenty Mining's stock?
A. $38.31
B. $36.87
C. $37.43
D. $39.22
The balance sheet of Acme Landscaping and Horticulture shows current assets of $584,000, fixed assets of $862,313, current liabilities of $498,000, and long-term debt of $234,500. Calculate the company's total stockholders' equity.
A. $924,813
B. $627,813
C. $713,813
D. $1,446,313
The past six monthly returns for a company's stock are 4.22 percent, 3.12 percent, 2.2 percent, 3.1 percent, 1.8 percent, and 5.2 percent. What's the average monthly return over those six months?
A. –2.45 percent
B. 3.27 percent
C. 1.51 percent
D. 2.12 percent
An 8 percent corporate coupon bond is callable in seven years for a call premium of one year of coupon payments. Assuming a par value of $1,000, what's the price paid to the bondholder if the issuer calls the bond?
A. $1,040
B. $920
C. $1,080
D. $1,160
_______ hold(s) that, in general, only a higher positive return can offset any negative return.
A. Compounding
B. The agency problem
C. The rule of 72
D. Return asymmetries
A three-year Treasury security currently earns 2.11 percent. Over the next three years, the real risk-free rate is expected to be 1.2 percent per year, and the inflation premium is expected to be 0.60 percent per year. What's the maturity risk premium on the three-year Treasury security?
A. 0.31 percent
B. 1.44 percent
C. 2.71 percent
D. 0.44 percent