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37) You receive a perpetual cash flow of $500 every year from the University at Albany at a rate of 8%. What is the value of this investment? a) Ad infinitum b) $40,125.00 c) $1,000.37 d) $6,250.00 e) $500.00

37) You receive a perpetual cash flow of $500 every year from the University at Albany at a rate of 8%. What is the value of this investment? a) Ad infinitum b) $40,125.00 c) $1,000.37 d) $6,250.00 e) $500.00

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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37) You receive a perpetual cash flow of $500 every year from the University at Albany at a rate of 8%. What is the value of this investment? a) Ad infinitum b) $40,125.00 c) $1,000.37 d) $6,250.00 e) $500.00 38) An interest rate is quoted at 10%, compounded semi-annually (six months). You have $110.25 at the end of the period for an interest rate of 10.25%. What is the 10.25% interest rate called? a) Stated interest rate. b) Annual Percentage Rate (APR) c) Effective Annual Rate d) An Interest only loan e) Simple interest For Questions 39-41, please use the following example: Bank of America wants to issue a $1,000,000 bond. The rate on debt issued by comparable company Citigroup is 12%. Thus, Bank of America will pay 12% per year in interest on monies borrowed for 30 years. Bank of America repays the principal at the end of year 30. 39) What is Bank of America's coupon payment? a) $1,000,000 b) 12% c) 30 years d) $120,000 e) Not able to calculate 40) What is the par value of Bank of America's bond? a) $1,000,000 b) 12% c) 30 years d) $120,000 e) Not able to calculate
Transcribed Image Text:37) You receive a perpetual cash flow of $500 every year from the University at Albany at a rate of 8%. What is the value of this investment? a) Ad infinitum b) $40,125.00 c) $1,000.37 d) $6,250.00 e) $500.00 38) An interest rate is quoted at 10%, compounded semi-annually (six months). You have $110.25 at the end of the period for an interest rate of 10.25%. What is the 10.25% interest rate called? a) Stated interest rate. b) Annual Percentage Rate (APR) c) Effective Annual Rate d) An Interest only loan e) Simple interest For Questions 39-41, please use the following example: Bank of America wants to issue a $1,000,000 bond. The rate on debt issued by comparable company Citigroup is 12%. Thus, Bank of America will pay 12% per year in interest on monies borrowed for 30 years. Bank of America repays the principal at the end of year 30. 39) What is Bank of America's coupon payment? a) $1,000,000 b) 12% c) 30 years d) $120,000 e) Not able to calculate 40) What is the par value of Bank of America's bond? a) $1,000,000 b) 12% c) 30 years d) $120,000 e) Not able to calculate
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