Simply highlight the correct answer (a, b, c, d or e) in yellow

1. What type of financial security is usually associated with the payment of a constant and perpetual monetary flow?

a) An obligation

b) A compound interest investment certificate

c) An ordinary share with an increasing dividend

d) A preferred share

e) A mortgage

2. Primo inc. wants to issue non-maturity preferred shares at a price of $10 per share and intends to pay a fixed dividend of $0.75 per share. Considering net issue costs of 2% of the price, what is the cost of capital associated with this source of financing?

a) 0.00%

b) 2.00%

c) 2.20%

d) 0.75%

e) 7.65%

3. A bond matures in six years. Its face value is $1,000, its market value is $993.56, and it pays semi-annual coupons of $55. The (effective annual) rate of return required from this bond is:

a) 11.46%

b) 11.30%

c) 11.15%

d) 11.00%

e) 10.89%

4. You want to measure the long-term solvency of a business. The most appropriate category of financial ratios for your purposes is:

a) Profitability ratios

b) Management ratios

c) Liquidity ratios

d) Debt ratios

e) None of the above

5. The compounding factor of an amount of $1 invested for 5 years at an annual nominal interest rate of 12% compounded quarterly is:

a) 1.81

b) 1.59

c) 1.39

d) 1.19

e) 1.00

6. The compounding factor of an amount of $1 invested for 24 months at an annual nominal interest rate of 8% compounded semi-annually is:

a) 1.91

b) 1.69

c) 1.49

d) 1.17

e) 1.00

7. The discount factor of an amount of $1 to be received in 2 years for an annual nominal interest rate of 8% compounded semi-annually is:

a) 0.85

b) 0.95

c) 1.00

d) 1.17

e) 0.04

8. The present value of an amount of $1 to be received in 2 years for an annual nominal interest rate of 8% compounded semi-annually is:

a) $0.95

b) $0.90

c) $0.85

d) $0.80

e) $0.40

9. What will be the future value in 5 years of an amount of $1,000 invested at an interest rate of 1% per month for 2 years, then at an annual nominal rate of 6% compounded monthly?

a) $1,600.00

b) $1,494.01

c) $1,512.27

d) $1,214.96

e) $1,519.47

10. What will be the future value in 5 years of an amount of $1,000 invested at an interest rate of 0% for 2 years, then at an annual nominal rate of 6% compounded monthly?

a) $0

b) $1,191.02

c) $1,430.77

d) $1,600.00

e) $1,196.68