**Question**

**1.**

1-What is the present value of a constant perpetuity of 25 per year where the required rate of return is 5%?

**193.61**

**22.73**

**500.00**

**250.00**

2-Calculate the 2 year annuity factor if the required rate of return is 10%.

**2.486**

**1.736**

**0.091**

**0.826**

3-What is the present value of a cash inflow of 1250 four years from now if the required rate of return is 8% (Rounded to 2 decimal places)?

**918.79**

**938.75**

**835.75**

**992.50**

4-What is the future value of 875 six years from now if the required rate of return is 7% (Rounded to 2 decimal places)?

**1550.50**

**1147.13**

**1281.00**

**1313.14**

5-If the present value of a growing perpetuity is 214, the required rate of return is 10%, and growth rate is 3%, what is the cash flow in year 1? (Round to the nearest whole number).

**3057**

**15**

**21**

**6**

6-If a bond is trading at a premium, what is the relationship between the bond’s coupon rate, current yield and yield to maturity?

**Coupon Rate < Current Yield < Yield to Maturity**

**Coupon Rate > Current Yield > Yield to Maturity**

**Coupon Rate > Yield to Maturity > Current Yield**

**Coupon Rate = Current Yield = Yield to Maturity**

7-What is the current yield on a 3 year bond with 10% annual coupons, a par value of 100, and a current price of 107.87?

**7.37%**

**7.00%**

**9.27%**

**10.00%**

8-What is the yield to maturity for a 3 year bond with a 10% annual coupon if the bond is trading at par?

**9.00%**

**11.00%**

**10.00%**

**9.75%**

9-What is the price of a two year bond with a 9% annual coupon and a yield to maturity of 8%?

**97.51**

**101.78**

**105.25**

**102.53**

10-What is the definition of yield to maturity?

**The return the investor gets from the income component of a bond as a percent of it’s current price**

**The overall return the investor makes if they purchase a bond today and hold to maturity**

**The overall return the investor makes as a percent of a bond’s par value**

**The return the investor gets from the income component of a bond as a percent of it’s par value**

11-What is the weight of capital for ABC Limited which has the following capital structure? $5m of equity with a cost of equity of 15%; $2m of mezzanine finance with a cost of 9.5%; $1m of senior debt with a cost of debt of 7%

**13.73%**

**8.63%**

**9.56%**

**12.63%**

12-What is the expected share return given the following macro-economic probabilities? Probability of recession 20% – Share return 5%; Probability of steady state 60% – Share return 10%; Probability of boom 20% – Share return 15%

**7%**

**12%**

**8%**

**10%**

13-Calculate a four-day moving average for the price of the stock for the end of Day 7. Day 1 – 62.00; Day 2 – 56.00; Day 3 – 50.00; Day 4 – 60.00; Day 5 – 59.00; Day 6 – 55.00; Day 7 – 59.00; Day 8 – 63.00

**56.25**

**57.00**

**58.25**

**59.00**

14-Calculate a three-day weighted moving average for the price of the stock for the end of Day 7 where the most recent price has a weight of 3, the next has a weight of 2, and the oldest price has a weight of 1. Day 1 – 62.00; Day 2 – 56.00; Day 3 – 50.00; Day 4 – 60.00; Day 5 – 59.00; Day 6 – 55.00; Day 7 – 59.00; Day 8 – 63.00

**57.17**

**57.83**

**56.00**

**57.67**

15-An insurance company has provided you with a sample of paid claims. The sample includes the following claims: 192, 113, 200, 287, and 225. What are the mean and the variance respectively of this sample rounded to nearest whole number?

**210, 3942**

**210, 63**

**203, 63**

**203, 3942**

16-In the simple linear regression equation y = α + βx + ε, what is β?

**The error term**

**The slope of the line of best fit**

**The independent variable**

**The y intercept**

17-Covariance is best described as:

**a measure of how much two sets of numbers change together**

**a measure of how far one set of numbers are spread out from each other**

**a weighted average of all possible values that a variable can take on**

**the square root of the variance**

18-What does a diagram of a perfectly positive correlation look like?

**A curved line that slopes from the bottom left to the top right quardrant**

**A perfectly straight line that slopes from the bottom left to the top right quardrant**

**A perfectly straight line that slopes from the top left to the bottom right quardrant**

**A scatter plot that have dots all over the place**

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