15) You want to have $2 mllion in real dellars in an account when you retire in

Question

15) You want to have $2 mllion in real dellars in an account when you retire in 35 years 1 inflaticn ate is 32 The nominal return on your investment is 9.94 percent and the percent. What is the real amount you must deposit each year to achieve yor goal? A) S7,482 B) S20,403 C)$18,887 CISI D) S16,017 E)$19,711 16) Senset Sales has 68 percent coupon bonds on the market with 11 years left to maturity, 16 The bonds make semiannual payments and currently sell for 98.6 percent of par. What is he effective annual yield? A) 7.19 percent B)7.33 percent C)7.11 percent 0) 7.24 percent E)7.07 percent 17) Which one of the folowing statements concerning bond ratings is correct 17) A) Split-raned bonds are called crossover bonds. B) Investment grade bonds are rated BB or higher by Standard& Poors C) Bond ratings assess both interest rate risk and default risk DIA "fallen anpel is a term applied to all "junk bonds E) The highest rating issued by Moody's is AAA 18) The yields on a corporate bond difer from those on a comparable Treasury security 8 primarily because of A) taxes and default risk B) interest rate risk and taxes C) default and imerest rate risks O) default, inflation, and interest rate risks E) liguidity and inflation rate risks 19) The Comer Grocer has a 7-year, 6.5 percent semiannual coupon bond outstanding with a 19 $1,000 par value. The bond has a yiekd to maturity of 5.5 percent. Which one of the following statements is correct if the market yield suddenly increases to 7.25 percent A) The bond price will decrease by 9.27 percent. B) The bond peice will increase by 3.86 percem C) The bond price will decrease by 8.64 percent D) The bond peice will increase by 7.16 percent E) The bond price will increase by 7.04 percent 20 What is the model called that determines the market value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate? A) Capital pricing model B) Realized-growth model C) Maximal-growth model D) Realized-carnings model E) Constan-growth model 21) A decrcase in which of the following will incrcase the curent valuc of a stock according 21) to the dividend growth model? A) Dividend growth rate

Explanation / Answer

Please find answers for the question no 21, 25, 26, 27 & 28

21

C

25

E

26

C

27

D

28

B

21

C

25

E

26

C

27

D

28

B

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