Essay about Practice Exam A

Submitted By estgermain8
Words: 1825
Pages: 8


1. Suppose that in November 2007 you bought 10 shares of Google stock for $711.25 per share. Three years later you decide to sell the stock when it is trading at $597.45 per share.
What compound annual rate does your capital gain or loss represent?

2. To raise capital for building a new store in Central Pennsylvania, Trader Joe’s issues
10-year $1000 bond, with a 7% coupon rate. If interest on the bond is paid quarterly, calculate the total interest that will be paid over the life of the bond.

3. Suppose you deposit $150 each month into an account that earns 6.25%. After 10 years your account will have grown to $24,918.28. How much interest would you have earned?

4. Suppose Ansel, Gertrude and James are partners in a photography business and they agree to a 4:5:6 split of the profits. If they earned $4500 in profits last month, how much of the profit will Gertrude receive?

5. Suppose you want to buy a new car and you determine that you can afford to make monthly payments of $375. If you take out a 5-year loan at an interest rate of 6.15%, how much will you be able to borrow?

6. Gateway Security Systems, Inc posted $950,000 in profits last quarter, $640,000 of which will be distributed as a dividend, and there are 1,500,000 shares of stock. If you own 230 shares, how much of a dividend will you receive?

7. Suppose Jack took out a 15-year mortgage for $135,000 at an interest rate of 8.15%. His monthly payment is $1301.85. After 7 years, how much does Jack owe on his mortgage?

8. Suppose you invest $4000 in a Roth IRA, in an investment account which earns 9.25% over 30 years. What will be the after-tax value of your account (after 30 years)?



9. Suppose a retailer sets its prices to include the 6.5% sales tax. If total sales for March are $46,769, how much sales tax will the retailer need to pay for its March sales?

10. Suppose you want to save up $250,000 over the next 8 years. If you can make monthly deposits into an investment account earning 7.5% interest, how much should you deposit each month? The annuity factor for monthly deposits at 7.5% interest for 8 years is

11. Suppose an architectural firm has 4 partners, Al, Becky, Carter, and Dave. They distribute the firm’s profits in an 10:12:9:5 split. If the firm has $120,345 in profits for last quarter and the entire profit will be distributed to the partners, how much profit will Becky receive? 12. A firm with $136,000,000 in profits for the last quarter declares a 15% dividend. The company has 2,000,000 shares of stock outstanding and the market price of the stock is currently $131.23 per share. Calculate the stock’s current dividend yield.

13. Suppose you bought stock in QED industries 6 years ago at $23.45 per share. Since you bought it, the stock has split 2 for 1 twice and is currently trading at $11.21 per share.
If you sold the stock at the current price, what compound annual does your capital gain represent? 14. Suppose you buy a corporate bond with a par value of $1,000 with a 9% coupon rate.
Interest is paid semi-annually. If you paid a $230 premium for the bond (that is, if you paid $1230 for the bond) what is the current yield on your investment?

15. Suppose you decide to invest your $1500 tax refund in mutual fund that has a net asset value of $31.25. If the mutual fund charges a 5% load, how many shares will you own with you $1500 investment?

16. Two years ago you invested $10,000 in a mutual fund and today that investment is worth $9567. But your rate of return for the year that just ended was 18%. Calculate the rate of return on your investment for the first year.



17. The Benson Group Corp provides lifetime income to employees on retirement at age
65. The formula provides 1.75% for each year of service of the average of the employee’s earnings for the last 3 years of service, up to a maximum of 75%. If Jean is retiring this