Fall 2017 (Version A) 81. Today, you borrowed S6,200 on your credit card to purc
ID: 2803866 • Letter: F
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Fall 2017 (Version A) 81. Today, you borrowed S6,200 on your credit card to purchase skn you debt rate is 14.9 percent, assumin $120? 0 compounded monthly. How long will it take you to pay off this you do not charge anything else and make regular monthly payments of a. 5.87 years b. 6.40 years c. 6.93 years d. 7.23 years e. 7.31 years 32. Standard deviation measures which type of risk? a. Total b. No diversifiable c. Unsystematic d. Systematic e. Unique The bonds issued by Stainless Tubs bear an 8 percent coupon, payable semiannually. The bonds mature in 11 years and have a $1,000 face value. Currently, the bonds sell for $952. What is the yield to maturity? 33· a. 7.87 percent b. 7.92 percent c. 8.08 percent d. 8.69 percent e. 9.20 percent 34. If overall interest rates in the economy rise, a corporate bond with a f will generally: a. increase in value. b. decrease in value. c. remain unchanged d. become worthless. e. be returned to the corporation.Explanation / Answer
31. Today, you borrowed $6,200 on your credit card to purchase some furniture. The interest rate is 14.9 percent, compounded monthly. How long will it take you to pay off this debt assuming that you do not charge anything else and make regular monthly payments of $120? Ans: c. 6.93 years 83.14 months/12 = 6.93 years 32. Standard deviation measures which type of risk? Ans: a. Total 33. The bonds issued by Stainless Tubs bear an 8 percent coupon, payable semiannually. The bonds mature in 11 years and have a $1,000 face value. Currently, the bonds sell for $952. What is the yield to maturity? Ans: d. 8.69 percent PV=-952, FV=1000, n=11*22, pmt=80/2=40, solve for I=4.35. This is a 6 month rate, so double it for the yield to maturity of 8.69. 34. If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally b. decrease in value. Ans: b. decrease in value.
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