Study Guide for Exam 2
Study Guide for Exam 2 MKT 305
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This 3 page Study Guide was uploaded by Alia Coughlan on Tuesday October 11, 2016. The Study Guide belongs to MKT 305 at Colorado State University taught by James Cook in Summer 2015. Since its upload, it has received 17 views. For similar materials see Fundamentals of Marketing in Business at Colorado State University.
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Date Created: 10/11/16
Study Guide for Exam 2 for FIN 305 1. If you invest $15000 for 11 years at 8.5% compounded annually, how much will the investment be worth at the end of the period? 2. When is annuity due? 3. When is ordinary annuity due? 4. If you invest $2000 at the end of each year for 18 years in an investment that is expected to earn 10% annually, how much will your investment be worth at the end of the 18 years? 5. A Corp has an opportunity to purchase an investment that will pay it $100,000 in 10 years. If the corporations required return for this type of investment is 15.5%, what is the most it will pay for the investment? 6. What are the characteristics of perpetuities? 7. A preferred stock pays an annual dividend of $8. If the market price for stock is $100, what is the market’s required return for this investment? 8. What does the rule of 72 estimate? 9. How long will it take $4000 to grow to $30,000 if it earns a 12% rate of return? 10.C plans to invest $500 in a mutual fund at the end of each month. If he can earn 10% compounded monthly on his investment, how many years will it take for the mutual fund to grow to $50,000? 11.List the two components of loan payments: 12.Documents that represent the right to receive funds in the future are called… 13.What are T bills? 14.These are dollars denominate deposits located in non-US banks: 15.Name the two types of stock: 16.These help to facilitate the flow of funds in the marketplace: 17.What does market efficiency refer to? 18.Real estate market is generally what? 19.What compensates for the lenders lost opportunity to consume? 20.What erodes the purchasing power of money? 21.Investments that are easy to sell without losing value are more or less liquid? 22.What does the yield curve illustrate? Key: 1. 36,797.51 2. At the beginning of the period 3. At the end of the period 4. 91,198.35 5. 23,669.01 6. Fixed payments, no maturity date, pays the fixed payment forever 7. 8% 8. How long it takes to double you money given a rate of return 9. 17.78 10.73.04 11.Principal and interest 12.Securities 13.Short term securities issued by the Federal government 14.Eurodollars 15.Common stock, preferred stock 16.Financial Intermediaries 17.Ease, speed and cost 18.Inefficient 19.Real rate of interest 20.Inflation 21.More 22.Term structure for bonds with the same level of risk
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