FIN 419 Final exam latest
1. You want to invest in a stock that pays $6.00 annual cash dividends for the next five years.
At the end of the five years you will sell the stock for $30.00. If you want to earn 10% on this
investment what is a fair price for this stock if you buy it today?
$22.75
$40.37
$18.63
$41.37
today's price (P) = (future price × PVF) + (dividend stream × PVAF)
= ($30 × 0.620921) + ($6 × 3.790787) = $18.628 + $22.745 = $41.372 or about
$41.37.
2. ________ provides financial advice helps design bond terms makes sure that new bonds
meet listing requirements and then markets new bond issues.
An investment banker
The Federal Reserve
A stock broker
The Securities and Exchange Commission
3. An investment of $100 today is worth $116.64 at the end of two years if it earns an annual
interest rate of 8%. How much interest is earned in the first year and how much in the second
year of this investment?
The interest earned in year one is $8.64 and the interest earned in year two is $8.00.
There is not enough information to solve this problem.
1. You want to invest in a stock that pays $6.00 annual cash dividends for the next five years.
At the end of the five years you will sell the stock for $30.00. If you want to earn 10% on this
investment what is a fair price for this stock if you buy it today?
$22.75
$40.37
$18.63
$41.37
today's price (P) = (future price × PVF) + (dividend stream × PVAF)
= ($30 × 0.620921) + ($6 × 3.790787) = $18.628 + $22.745 = $41.372 or about
$41.37.
2. ________ provides financial advice helps design bond terms makes sure that new bonds
meet listing requirements and then markets new bond issues.
An investment banker
The Federal Reserve
A stock broker
The Securities and Exchange Commission
3. An investment of $100 today is worth $116.64 at the end of two years if it earns an annual
interest rate of 8%. How much interest is earned in the first year and how much in the second
year of this investment?
The interest earned in year one is $8.64 and the interest earned in year two is $8.00.
There is not enough information to solve this problem.
