1. An asset has a 15% chance of a -10% return, a 25% chance of a 0% return, a 25% chance of a 5% returns, and a 35% chance of a 20% return. What is the expected rate of return of this asset? 3.75% 4.25% 5.30% 6.75% 7.95%
2. A $1,000 par value bond has 25 years to maturity, a 4% annual coupon, and sells for $1,025. What is the capital gains yield? -0.30% -0.15% -0.06% 0.23% 0.54%
3. Jacobsen Chemicals recently reported $780,000 of sales, $600,000 COGS, and $145,000 of depreciation and amortization charges. It has outstanding $600,000 of bonds that have a 6% coupon rate. What was the firm's taxable income (EBT)? -$13,000 -$1,000 $10,500 $28,000 $34,000