FI 515 Midterm

1. Question : (TCO G) Which of the following statements is correct?


2. Question : (TCO D) Which one of the following statements is most correct?


3. Question: What's the future value of $1,500 after 5 years if the appropriate interest rate is 12%, compounded monthly?


4. Question: (TCO B) You deposit $1,000 today in a savings accunt that pays 4.0% interest, compounded annually.  How much will your account be worth at the end of 25 years?


5. Question: (TCO B) You are interested in saving money for your first house.  Your plan is to make regular deposits into a brokerage account which will earn 14 percent.  Your first deposit of $5,000 will be made today (January 1st). You also plan to make four additional deposits at the beginning of each  of the next four years.  Your plan is to increase your deposits by 10 percent a year.  (that is your plan is to deposit $5,500 at t+1, and $6,050 at t+2, etc.)  How much money will be in your account after five years?


6. Question: (TCO A) Which of the following statements is correct.


7. Question: (TCO A) Other things held constant, which of the following alternatives would increase a company's cash flow for the current year?


8. Question: (TCO C) Which of the following statements is correct?  (Assume that the risk-free rate is a constant)


9. Question: (TCO C) JBS Inc. recently reported net income of $4,750 and depreciation of $885.  How much was its net cash flow, assuming it had no amortization expense and sold none of its fixed assets?


10. Question:(TCO C) You read in the Wall Street Journal that 30-day US Treasury Bills are currently yielding 8%.  Your brother-in-law, a broker, a broker at Kyoto Securities, has given you the following estimates of current interest rate premiums:

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    FIN 515 Midterm Exam Answers

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