1. A 4-year annuity of eight $11,400 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.
If the discount rate is 11 percent compounded monthly, what is the current value of the annuity?
2. Which one of these statements is correct?
a) The asset beta will equal the equity beta for a levered firm.
b) Leverage increases the asset beta.
c) A portfolio beta is the summation of the betas of each of the individual securities held in the portfolio.
d) The equity beta refers to the beta of an all-equity firm.
e) Financial leverage refers to a firm's use of debt and its related fixed costs of finance.