1. If you make an annual end-of year deposit of $200 to your retirement account for twenty years, and the account earns 15% per year, how much will you have available for retirement twenty years from today.
$20,488
$ 4,000
$10,821
$40,000
2. You pay $20 to get $28 one year from today. What is your return on investment?
40%
108%
140%
80%
3. You deposit $50 in the bank today and three years later you have $61.25 in the bank. What annual rate of interest did the bank pay you over the three-year period?
7%
10%
6%
22%
4. What would you pay for a stock which just paid a $5 dividend (D0) if the expected dividend and earning growth rate is 4% and you require a 16% return on your investment?
$33
$43
$51
$77
5. If you were offered $10 ten years from today and you can earn 20% on your investments, how much would you be willing to pay today for the $10.
$10.00
$12.00
$1.61
$5.20
6. If you pay $1,000 for the privilege of receiving $199.25 for each of the next ten years, what interest rate are you earning on your money?
15%
10%
11%
21%
7. The current price of Houston Tennis Inc. Stock is $50. Dividends are expected to grow at 4% indefinitely and last dividend was $2.0. What is the required rate of return on Houston Tennis Inc.?
8.2 %
9.1%
10%
11.6%
8. One of the basic relationships in interest rate theory is for a given change in yield to maturity, the ______________ the time to maturity, the _____________ the change in price.
longer; smaller
shorter, greater
shorter, larger
longer; greater
none of the above
9. How much is $100 worth two years from now with quarterly compounding at a stated 12% rate.
$138.22
$112.0
$126.67
125.94
10. How much would you be willing to pay for an investment which paid you $100 at the end of each year for seven years? Assume you can earn 12% a year on other types of investments.
$456.37
$360.45
$612.21
$700.00
11. Which of the following types of compounding will cause a deposit of money to increase most rapidly?
annual
semi-annual
quarterly
daily