1. If you knew a bond would pay you $50 every year for 10 years and, at the end of the 10 years, you’d also receive a $1,000 payment, how much should you pay to purchase the bond? Assume similar bonds yield 8 percent, and select the value closest to the correct answer.
A. Not more than $336
B. Not more than $463
C. Not more than $733
D. Not more than $799
2. If an investor planned to put aside $30 per month for the next 20 years, and the investor combined that with $1,000 already saved, how much should the investment be worth after 20 years? Assume 9 percent annual growth with monthly compounding, and select the value closest to the correct answer.
A. $7,139
B. $22,597
C. $24,022
D. $26,046
3. Which of the following portfolios with zero risk lies closest to the efficient frontier?
A. Return = 7.8 percent, standard deviation = 3.0
B. Return = 0 percent, standard deviation = 0
C. Return = 8 percent, standard deviation = 3.0
D. Return = 5 percent, standard deviation = 0
4. What is the return on the following portfolio?
Asset 1, representing 50 percent of the portfolio value 6%
Asset 2, representing 30 percent of the portfolio value 10%
Asset 3, representing 20 percent of the portfolio value 12%
A. 8.40 percent
B. 8.60 percent
C. 9.20 percent
D. 9.33 percent