1 . A company has an ROA of 10.0% and a retention ratio of 60%. What is its inte

Question

1 .A company has an ROA of 10.0% and a retention ratio of 60%. What is its internal growth rate?

6.4%

4.6%

6.0%

94.0%

2.You have borrowed $4,000 from your parents after graduation to get settled into your career. If they charge you 3% percent APR and you can pay them $100 per month, how long will it take to pay them back?

37 months

40 months

43 months

45 months

3.A car dealer will sell you a car for $25,000. You have two financing options. The first option is to reduce the car's price by $2,000 and pay monthly payments on a four year loan at 6% APR. The second option is to pay full price, but pay monthly payments on a four year loan at 2% APR. Which financing option is cheaper per month? By how much?

first cheaper by $4 per month

first cheaper by $2 per month

second cheaper by $4 per month

second cheaper by $2 per month

4.Assume the existing or current (spot) one-year, two-year, three-year, and four-year zero-coupon Treasury security rates are as follows: 1R1 = 0.75%; 1R2 = 0.95%; 1R3 = 1.25%; 1R4 = 2.25%. Using the unbiased expectations theory, calculate the one-year forward rates on zero-coupon Treasury bonds for years three and four as of today.

1.58% and 3.51%

1.85% and 5.31%

1.75% and 2.75%

5.57% and 3.27%

5.Which of the following instruments is a derivative market security?

Chinese yuan.

Stock traded in capital markets.

British pounds.

wheat futures.

6.During the financial crisis that started in 2006 and 2007, the decreased availability of credit, along with damaged investor confidence, led businesses to

reduce their forecasted sales and revenue figures.

reduce dividend payout ratios.

increase spending on energy-related infrastructure.

increased their workforces.

6.4%

4.6%

6.0%

94.0%

Explanation / Answer

.A company has an ROA of 10.0% and a retention ratio of 60%. What is its internal growth rate?

6.4%----------answer

-

growth rate = (ROE x Retention Ratio )/(1

6.4%----------answer

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