Question

Billy Thornton borrowed $20,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360-day year. How much interest would Billy have to pay in a 30-day month? a. $139.88 b. $133.22 c. $120.83 d. $126.88 e. $146.87 1 points QUESTION 9 Suppose you borrowed $14,000 at a rate of 10.0% and must repay it in 5 equal installments at the end of each of the next 5 years. How much interest would you have to pay in the first year? a. $1,400.00 b. $1,330.00 c. $1,200.33 d. $1,470.00 e. $1,263.50 1 points QUESTION 10 Consider the following average annual returns for Stocks A and B and the Market. Which of the possible answers best describes the historical betas for A and B? Years Market Stock A Stock B 1 0.03 0.16 0.05 2 −0.05 0.20 0.05 3 0.01 0.18 0.05 4 −0.10 0.25 0.05 5 0.06 0.14 0.05 a. bA < 0; bB = 0. b. bA > +1; bB = 0. c. bA > 0; bB = 1. d. bA = 0; bB = −1. e. bA < −1; bB = 1. 1 points QUESTION 11 Bonds for two companies were just issued: Short Corp.'s bonds will mature in 5 years, and Long Corp.'s bonds will mature in 15 years. Both bonds promise to pay a semiannual coupon, they are not callable or convertible, and they are equally liquid. Further, assume that the Treasury yield curve is based only on expectations about future inflation, i.e., that the maturity risk premium is zero for T-bonds. Under these conditions, which of the following statements is correct? a. If Long's and Short's bonds have the same default risk, their yields must under all conditions be equal. b. If the yield curve for Treasury securities is flat, Short's bond must under all conditions have the same yield as Long's bonds. c. If the yield curve for Treasury securities is upward sloping, Long's bonds must under all conditions have a higher yield than Short's bonds. d. If the Treasury yield curve is upward sloping and Short has less default risk than Long, then Short's bonds must under all conditions have the lower yield. e. If the Treasury yield curve is downward sloping, Long's bonds must under all conditions have the lower yield. 1 points QUESTION 12 Other things held constant, the value of an option depends on the stock's price, the risk-free rate, and the a. Variability of the stock price. b. Option's time to maturity. c. Strike price. d. All of the above. e. None of the above. 1 points QUESTION 13 Young & Liu Inc.'s free cash flow during the just-ended year (t = 0) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions? a. $1,103 b. $1,158 c. $998 d. $1,050 e. $948 1 points QUESTION 14 You plan to invest some money in a bank account. Which of the following banks provides you with the highest effective rate of interest? a. Bank 3; 6.0% with annual compounding. b. Bank 4; 6.0% with quarterly compounding. c. Bank 2; 6.0% with monthly compounding. d. Bank 1; 6.1% with annual compounding. e. Bank 5; 6.0% with daily (365-day) compounding. 1 points QUESTION 15 An investor who writes standard call options against stock held in his or her portfolio is said to be selling what type of options? a. Covered b. Naked c. Out-of-the-money d. Put e. In-the-money 1 points QUESTION 16 JG Asset Services is recommending that you invest $1,500 in a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures? a. $1,964.14 b. $1,870.61 c. $2,062.34 d. $2,165.46 e. $1,781.53 1 points QUESTION 17 Which of the following statements is CORRECT? a. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is below the coupon rate than if it is above the coupon rate. b. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is above the coupon rate than if it is below the coupon rate. c. The actual life of a callable bond will always be equal to or less than the actual life of a noncallable bond with the same maturity. Therefore, if the yield curve is upward sloping, the required rate of return will be lower on the callable bond. d. A callable 10-year, 10% bond should sell at a higher price than an otherwise similar noncallable bond. e. Corporate treasurers dislike issuing callable bonds because these bonds may require the company to raise additional funds earlier than would be true if noncallable bonds with the same maturity were used. 1 points QUESTION 18 Squire Inc.'s 5-year bonds yield 6.75%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Squire's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t − 1) × 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Squire's bonds? a. 0.68% b. 0.55% c. 0.75% d. 0.49% e. 0.61% 1 points QUESTION 19 Assume that Congress recently passed a provision that will enable Barton's Rare Books (BRB) to double its depreciation expense for the upcoming year but will have no effect on its sales revenue or tax rate. Prior to the new provision, BRB's net income after taxes was forecasted to be $4 million. Which of the following best describes the impact of the new provision on BRB's financial statements versus the statements without the provision? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.​ a. ​Net fixed assets on the balance sheet will increase. b. ​The provision will increase the company's net income. c. ​The provision will reduce the company's net cash flow. d. ​Net fixed assets on the balance sheet will decrease. e. ​The provision will increase the company's tax payments. 1 points QUESTION 20 Which of the following statements is CORRECT? a. If you solve for I and get a negative number, then you must have made a mistake. b. To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the PV of the negative CFs. This is, essentially, a trial-and-error procedure that is easy with a computer or financial calculator but quite difficult otherwise. c. If you have a series of cash flows, each of which is positive, you can solve for I, where the solution value of I causes the PV of the cash flows to equal the cash flow at Time 0. d. If CF0 is positive and all the other CFs are negative, then you cannot solve for I. e. If you have a series of cash flows, and CF0 is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost. 1 points QUESTION 21 Assume that the current corporate bond yield curve is upward sloping. Under this condition, then we could be sure that a.

Answer 1

Interest in one-month = Principal amount * interest rate * 30/360

Interest in one-month = 20,000*0.0725*30/360 = $120.83 (Option c)

Please do not downvote for not answering the remaining questions. As per Chegg guidelines, when there are multiple questions, we are encouraged to provide a solution to at least the first question.

So, can you please upvote? Thank you :-)