1. Which one of the following is defined as a type of risk that affects all securities in a market?
A. unique
B. diversifiable
C. systematic
D. asset-specific
E. total
2. Which one of the following accurately describes the two parts of the DuPont identity for the return on assets ratio?
A. leverage ratio and profit margin
B. leverage ratio and operating efficiency
C. profit margin and total asset turnover
D. operating efficiency and total asset turnover
E. leverage ratio and total asset turnover
3. You just purchased an annuity that will pay you $24,000 a year for 25 years, starting today. What was the purchase price if the discount rate is 8.5% compounded annually?
A. $241,309
B. $245,621
C. $251,409
D. $258,319
E. $266,498
4. You are comparing two annuities with equal present values. The applicable discount rate is 7.25% for both annuities. One annuity pays $2,500 at the beginning of each year for the next fifteen years. How much does the second annuity pay each year for fifteen years if it pays at the end of each year instead of at the beginning? (Hint: You are dealing with an annuity due and an ordinary annuity where their present values are equal to each other.)
A. $2,331.00
B. $2,266.67
C. $2,500.00
D. $2,390.50
E. $2,681.25