Financial literacy

You are looking at a one-year loan of $18,500. The interest rate on a one-year l

You are looking at a one-year loan of $18,500. The interest rate on a one-year loan is quoted as 11.2 percent plus three points. What is the EAR of this loan? (Do not round interm…

You are looking at a one-year loan of $19, 500. The interest rate is quoted as 8

You are looking at a one-year loan of $19, 500. The interest rate is quoted as 8. 1 percent plus two points. A point on a loan is simply 1 percent (one percentage point) of the lo…

You are looking at a one-year loan of $20,000. The interest rate is quoted as 8.

You are looking at a one-year loan of $20,000. The interest rate is quoted as 8.0 percent plus four points. A point on a loan is simply 1 percent (one percentage point) of the loa…

You are looking at a one-year loan of $24,000. The interest rate is quoted as 12

You are looking at a one-year loan of $24,000. The interest rate is quoted as 12 percent plus three points. Apoint on a loan is simply 1 percent (one percentage point) of the loan…

You are looking at a one-year loan of $24,000. The interest rate is quoted as 12

You are looking at a one-year loan of $24,000. The interest rate is quoted as 12 percent plus three points. Apoint on a loan is simply 1 percent (one percentage point) of the loan…

You are looking at a one-year loan of $29,000. The interest rate is quoted as 12

You are looking at a one-year loan of $29,000. The interest rate is quoted as 12 percent plus two points. A point on a loan is simply 1 percent (one percentage point) of the loan …

You are looking at an investment for your firm. You can buy a manufacturing plan

You are looking at an investment for your firm. You can buy a manufacturing plant for your firm for $90 million. You consider this investment to be of average risk to your company…

You are looking for a $90,000 mortgage on a house you want to purchase and expec

You are looking for a $90,000 mortgage on a house you want to purchase and expect to sell after 9 years. You have two options: The %u201CBoring Bank%u201D offers you a simple fixe…

You are looking to buy a car. You can afford $440 in monthly payments for four y

You are looking to buy a car. You can afford $440 in monthly payments for four years. In addition to the loan, you can make a $1,100 down payment. If interest rates are 7.25 perce…

You are looking to buy a car. You can afford $580 in monthly payments for five y

You are looking to buy a car. You can afford $580 in monthly payments for five years. In addition to the loan, you can make a $680 down payment. If interest rates are 9.75 percent…

You are looking to buy a tract of land for plantation management. You find two a

You are looking to buy a tract of land for plantation management. You find two available pieces of land in the region. All thinnings will produce pulpwood. Use the following infor…

You are looking to purchase a new vehicle for $25,789. This vehicle gets 22 mpg

You are looking to purchase a new vehicle for $25,789. This vehicle gets 22 mpg and you average driving 14,000 miles per year. You expect that gasoline will average $2.10 per gall…

You are looking to purchase the latest model of the BMW 750 luxury sedan. The pr

You are looking to purchase the latest model of the BMW 750 luxury sedan. The price of the car is $82,000. However, you negotiate a six-year loan, with no money down and no monthl…

You are looking to take out a 300K USD mortgage for 30 years. After shopping aro

You are looking to take out a 300K USD mortgage for 30 years. After shopping around, you have two offers on the table: Bank 1: 2.9% interest rate, up front fees of 3,984 USD Bank …

You are making a $100,000 investment and feel that a 10 percent rate of return i

You are making a $100,000 investment and feel that a 10 percent rate of return is reasonable given the nature of the risks involved. You feel you will receive $50,000 in the first…

You are managing a pension fund with a value of $380 million and a beta of 1.70.

You are managing a pension fund with a value of $380 million and a beta of 1.70. You are concerned about a market decline and wish to hedge the portfolio. You have decided to use …

You are managing a portfolio of $1 million. Your target duration is 10 years, an

You are managing a portfolio of $1 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity of 5 years, and a perpetuity, eac…

You are managing a portfolio of $1 million. Your target duration is 10 years, an

You are managing a portfolio of $1 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity of 5 years, and a perpetuity, eac…

You are managing a portfolio of $1 million. Your target duration is 10 years, an

You are managing a portfolio of $1 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity of 5 years, and a perpetuity, eac…

You are managing a portfolio of $1,000,000. Your target duration is 10 years and

You are managing a portfolio of $1,000,000. Your target duration is 10 years and you can choose from two bonds: a zero coupon bond with maturity of 5 years, and a perpetuity, each…

You are managing a portfolio of $1.2 million. Your target duration is 10 years,

You are managing a portfolio of $1.2 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 7 years, and a perpetuity, each…

You are managing a portfolio of $1.9 million. Your target duration is 13 years,

You are managing a portfolio of $1.9 million. Your target duration is 13 years, and you can choose from two bonds: a zero-coupon bond with maturity 6 years, and a perpetuity, each…

You are managing a portfolio of $2.1 million. Your target duration is 20 years,

You are managing a portfolio of $2.1 million. Your target duration is 20 years, and you can choose from two bonds: a zero-coupon bond with maturity 10 years, and a perpetuity, eac…

You are managing a portfolio of $2.3 million. Your target duration is 10 years,

You are managing a portfolio of $2.3 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 8 years, and a perpetuity, each…

You are managing a portfolio of $2.4 million. Your target duration is 10 years,

You are managing a portfolio of $2.4 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each…

You are managing a portfolio of $2.4 million. Your target duration is 10 years,

You are managing a portfolio of $2.4 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each…

You are managing a portfolio of $2.7 million. Your target duration is 15 years,

You are managing a portfolio of $2.7 million. Your target duration is 15 years, and you can choose from two bonds: a zero-coupon bond with maturity 10 years, and a perpetuity, eac…

You are managing a portfolio of $2.8 million. Your target duration is 13 years,

You are managing a portfolio of $2.8 million. Your target duration is 13 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each…

You are managing a portfolio of $2.9 million. Your target duration is 14 years,

You are managing a portfolio of $2.9 million. Your target duration is 14 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each…

You are managing a portfolio of $2.9 million. Your target duration is 14 years,

You are managing a portfolio of $2.9 million. Your target duration is 14 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each…

You are married. You have two children. You children are ages 5 and 10. You are

You are married. You have two children. You children are ages 5 and 10. You are the only person in the family who is earning an income. Your annual expenses are $68,000. You would…

You are negotiating the terms of a legal settlement. You have been given several

You are negotiating the terms of a legal settlement. You have been given several different settlement options. Your average rate of return on the assets you currently hold is 5% a…

You are negotiating to make a 4-year loan of $25,000 to Bala Inc. To repay you,

You are negotiating to make a 4-year loan of $25,000 to Bala Inc. To repay you, Bala will pay $5,000 at the end of Year 1, $6,000 at the end of Year 2, plus a fixed but currently …

You are negotiating to make a 4-year loan of $25,000 to Bala Inc. To repay you,

You are negotiating to make a 4-year loan of $25,000 to Bala Inc. To repay you, Bala will pay $5,000 at the end of Year 1, $6,000 at the end of Year 2, plus a fixed but currently …

You are negotiating to make a 7 year loan of $25,000 to breck inc. To repay you,

You are negotiating to make a 7 year loan of $25,000 to breck inc. To repay you, Breck will pay $2,500 at the end of year 1, $5,000 at the end of year 2 and $7,500 at the end of y…

You are negotiating to make a 7-year loan of $25,000 to Breck Inc. To repay you,

You are negotiating to make a 7-year loan of $25,000 to Breck Inc. To repay you, Breck will pay $2,500 at the end of Year 1, $5,000 at the end of Year 2, and $7,500 at the end of …

You are now 50 years old and plan to retire at age 65. You currently have a stoc

You are now 50 years old and plan to retire at age 65. You currently have a stock portfolio worth $150,000, a 401(k) retirement plan worth $250,000 and a money market account wort…

You are offered a 5 year contract for a position at a large factory. They offere

You are offered a 5 year contract for a position at a large factory. They offered three different payment terms and asked you to decide your preferred option. Option 1 (Fixed Sala…

You are offered a 5 year contract for a position at a large factory. They offere

You are offered a 5 year contract for a position at a large factory. They offered three different payment terms and asked you to decide your preferred option. Option 1 (Fixed Sala…

You are offered a business that has expected after-tax cash flows of $100,000 a

You are offered a business that has expected after-tax cash flows of $100,000 a year for the next 10 years, the time period for your investment horizon. You require a 15% return o…

You are offered a business that has expected after-tax cash flows of $100,000 a

You are offered a business that has expected after-tax cash flows of $100,000 a year for the next 10 years, the time period for your investment horizon. You require a 15% return o…

You are offered a chance to buy an asset for $4,500 that is expected to produce

You are offered a chance to buy an asset for $4,500 that is expected to produce cash flows of $750 at the end of Year 1, $1,000 at the end of Year 2, $850 at the end of Year 3, an…

You are offered a chance to buy an asset for $4,500 that is expected to produce

You are offered a chance to buy an asset for $4,500 that is expected to produce cash flows of $750 at the end of Year 1, $1,000 at the end of Year 2, $850 at the end of Year 3, an…

You are offered a chance to by a put or call option from a currency dealer with

You are offered a chance to by a put or call option from a currency dealer with a strike price of USD 0.8300/CHF with June expiration and premium of USD 0.0050/CHF. Your Magic 8 B…

You are offered an asset that costs $14,000 and has cash flows as follows below

You are offered an asset that costs $14,000 and has cash flows as follows below at the end of each quarter for the next 8 years. Then it will be sold for $2,500. Your cost of capi…

You are offered an investment opportunity that costs you $28,000. has a net pres

You are offered an investment opportunity that costs you $28,000. has a net present value (NPV) of $2278. lasts for three years, has interest rale of 10%. and produces the followi…

You are offered two choices for financing your house, valued at $ 200,000 as fol

You are offered two choices for financing your house, valued at $ 200,000 as follows: A. a 90 percent LTV fixed rate 30-year mortgage at 6.00 percent. it will require private mort…

You are on the staff of Camden Inc. The CFO believes project acceptance should b

You are on the staff of Camden Inc. The CFO believes project acceptance should be based on the NPV, but Steve Camden, the president, insists that no project should be accepted unl…

You are on the staff of Camden Inc. The CFO believes project acceptance should b

You are on the staff of Camden Inc. The CFO believes project acceptance should be based on the NPV, but Steve Camden, the president, insists that no project should be accepted unl…

You are on the staff of Camden Inc. The CFO believes project acceptance should b

You are on the staff of Camden Inc. The CFO believes project acceptance should be based on the NPV, but Steve Camden, the president, insists that no project should be accepted unl…