# Gb550 unit 6 quiz

Aug 11th, 2016
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Question 1.1. Suppose a U.S. treasury bond will pay \$2,500 five years from now. If the going interest rate on 5-year treasury bonds is 4.25%, how much is the bond worth today? (Points : 4) \$1,928.78 \$2,030.30 \$2,131.81 \$2,238.40 Question 2. 2. Jose now has \$500. How much would he have after 6 years if he leaves it invested at 5.5% with annual compounding? (Points : 4) \$591.09 \$622.20 \$654.95 \$689.42 Question 3. 3. Which of the following statements regarding a 15-year (180-month) \$125,000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.) (Points : 4) The remaining balance after three years will be \$125,000 less one third of the interest paid during the first three years. Because it is a fixed-rate mortgage, the monthly loan payments (which include both interest and principal payments) are constant. Interest payments on the mortgage will increase steadily over time, but the total amount of each payment will remain constant. The proportion of the month

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Gb550 unit 6 quizQuestion 1.1. Suppose a U.S. treasury bond will pay \$2,500 five years from now. If the goinginterest rate on 5-year treasury bonds is 4.25%, how much is the bond worth today? (Points : 4)\$1,928.78\$2,030.30\$2,131.81\$2,238.40Question 2. 2. Jose now has \$500. How much would he have after 6 years if he leaves it investedat 5.5% with annual compounding? (Points : 4)\$591.09\$622.20\$654.95\$689.42Question 3. 3. Which of the following statements regarding a 15-year (180-month) \$125,000,fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.) (Points : 4)The remaining balance after three years will be \$125,000 less one third of the interest paidduring the first three years.Because it is a fixed-rate mortgage, the monthly loan payments (which include both interest andprincipal payments) are constant.Interest payments on the mortgage will increase steadily over time, but the total amount of eachpayment will remain constant.The proportion of the monthly payment that goes towards repayment of principal will be lower10 years from now than it will be the first yearThe outstanding balance declines at a slower rate in the later years of the loans life.Question 4. 4. The primary operating goal of a publicly-owned firm interested in serving itsstockholders should be to (Points : 4)Maximize the stock price per share over the long run, which is the stocks intrinsic value.Maximize the firm's expected EPS.Minimize the chances of losses.

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