DBU FINA 3301 Final Exam Study Guide || Questions and 100% Verified Answers.
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Course
DBU FINA 3301
Institution
DBU FINA 3301
Money markets are markets for correct answers Short-term debt securities
A corporate stock that was issued last year would now trade in the ____________ market. correct answers Secondary
If a corporation that has been in business for many years (for example IBM) wants to raise funds by issuin...
DBU FINA 3301 Final Exam Study Guide || Questions and
100% Verified Answers.
Money markets are markets for correct answers Short-term debt securities
A corporate stock that was issued last year would now trade in the ____________ market.
correct answers Secondary
If a corporation that has been in business for many years (for example IBM) wants to raise funds
by issuing new common stock, its stock will be sold in the ___________ market. correct answers
primary
Which of the following is not one of the four fundamental factors that affect the cost of money?
correct answers liquidity
You read in The Wall Journal that 30-day T-bills currently are yielding 8 percent. Your brother-
in-law, a broker at Kyoto Securities, has given you the following estimates of current interest
rate premiums:
Inflation premium 5%
Liquidity premium 11%
Maturity risk premium 2%
Default risk premium 2%
Based on these data, the real risk-free rate of return (r*) is correct answers 3%
Assume that the expectations theory holds, and that liquidity and maturity risk premiums are
zero. If the annual rate of interest on a 2-year Treasury bond is 10.5 percent and the rate on a 1-
year Treasury bond that is issued today is 12 percent, what rate of interest should you expect on a
1-year Treasury bond issued one year from now? correct answers 9.0%
All else equal, risk averse investors generally require __________ returns on investments with
___________ risks. correct answers higher; higher
You have just borrowed $20,000 to buy a new car. The loan agreement calls for 60 monthly
payments of $444.89 each to begin one month form today. If the interest is compounded
monthly, then what is the annual rate of interest on this loan? correct answers 12.00%
At an effective annual interest rate of 10 percent, how many years will it take a given amount to
triple in value? correct answers 11.53
If $100 is placed in an account that earns a simple 4 percent, compounded quarterly, what will it
be worth in 5 years? correct answers $122.02
If you buy a factory for $250,000 and the terms are 20 percent down, the balance to be paid off
over 30 years at a 12 percent rate of interest on the unpaid balance, what are the 30 equal annual
payments? correct answers $24,829
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