Multiple Choice Answers

Sadik Inc.’s bonds currently sell for $1,270 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?
5.89%
6.71%
4.65%
6.06%
4.77%

Malko Enterprises’ bonds currently sell for $1,330. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield?
7.05%
6.37%
5.58%
5.64%
5.75%

Adams Enterprises’ bonds currently sell for $880. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity?
10.69%
8.17%
8.98%
10.09%
8.88%

Suppose you are buying your first condo for $260,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?
$1,595.02
$1,548.57
$1,362.74
$1,455.65
$1,502.11

Suppose you just won the state lottery, and you have a choice between receiving $2,900,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.
5.51%

5.86%
5.39%
6.56%

6.86%

You want to quit your job and go back to school for a law degree 4 years from now, and you plan to save $6,800 per year, beginning immediately. You will make 4 deposits in an account that pays 5.7% interest. Under these assumptions, how much will you have 4 years from today?
$23,477.48
$31,616.33
$23,790.51
$37,250.93
$31,303.30

Ryngard Corp’s sales last year were $31,000, and its total assets were $16,000. What was its total assets turnover ratio (TATO)?
1.65
1.94
1.61
2.00
1.72

Ajax Corp’s sales last year were $505,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm’s times-interest-earned (TIE) ratio?
10.37
12.43
11.40

13.91
8.78

River Corp’s total assets at the end of last year were $390,000 and its net income was $32,750. What was its return on total assets?
8.40%
9.91%
7.73%
8.23%
8.82%

 

Kop Corporation’s 5-year bonds yield 6.50%, and T-bonds with the same maturity yield 4.80%. The default risk premium for Kop’s bonds is DRP = 0.40%, the liquidity premium on Kop’s bonds is LP = 1.30% versus zero on T-bonds, the inflation premium (IP) is 1.50%, and the maturity risk premium (MRP) on 5-year bonds is 0.40%. What is the real risk-free rate, r*?
3.07%
2.44%
2.90%
2.35%
2.99%

Assume that you are considering the purchase of a 20-year, 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 8.1% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
$1,228.53
$944.15
$887.27
$1,239.90
$1,137.52