6. You want to buy a new car for $480,000, and the car dealership has quoted you an 4.6%APR loan compounded monthly for 48 months to buy the car. What is the EAR on thisloan?A. 4.66%B. 4.68%C. 4.70%D. 4.72%7. Grand Land Limited offers a 9.5% coupon bond with annual payments. The yield tomaturity is 11.2% and the maturity date is 11 years from today. What is the market price ofthis bond if the face value is $1,000?A. $895.43B. $1,009.67C. $1,112.20D. $1,234.188. How much are you willing to pay for one share of ABC stock if the company just paid a$0.70 annual dividend, the dividends increase by 1.6% annually, and you require a 10%rate of return?A. $8.29B. $8.33C. $8.47D. $8.539. A project has an initial cost of $6,500,000. The cash inflows are $900,000, $2,200,000,$3,600,000, and $4,100,000 over the next four years, respectively. What is the paybackperiod?А. 1.73 yearsВ. 2.51 уearsС. 2.94 yearsD. 3.51 years10. Suppose a stock had an initial price of $80 per share, paid a dividend of $1.35 per shareduring the year, and had an ending share price of $87. What was the capital gains yield?A. 7.55%В. 7.69%C. 8.05%D. 8.75%**

Answer 6: Effective annual interest rate =(1+Raten)^n-1 where Rate = nominal interest rate n=number…

6. You want to buy a new car for $480,000, and the car dealership has quoted you an 4.69 APR loan compounded monthly for 48 months to buy the car. What is the EAR on thi loan? A. 4.66% B. 4.68% C. 4.70% D. 4.72% 7. Grand Land Limited offers a 9.5% coupon bond with annual payments. The yield t maturity is 11.2% and the maturity date is 11 years from today. What is the market price o this bond if the face value is $1,000?

6. You want to buy a new car for $480,000, and the car dealership has quoted you an 4.69 APR loan compounded monthly for 48 months to buy the car. What is the EAR on thi loan? A. 4.66% B. 4.68% C. 4.70% D. 4.72% 7. Grand Land Limited offers a 9.5% coupon bond with annual payments. The yield t maturity is 11.2% and the maturity date is 11 years from today. What is the market price o this bond if the face value is $1,000?

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

Problem 1PS

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Question

6. You want to buy a new car for $480,000, and the car dealership has quoted you an 4.6%
APR loan compounded monthly for 48 months to buy the car. What is the EAR on this
loan?
A. 4.66%
B. 4.68%
C. 4.70%
D. 4.72%
7. Grand Land Limited offers a 9.5% coupon bond with annual payments. The yield to
maturity is 11.2% and the maturity date is 11 years from today. What is the market price of
this bond if the face value is $1,000?
A. $895.43
B. $1,009.67
C. $1,112.20
D. $1,234.18
8. How much are you willing to pay for one share of ABC stock if the company just paid a
$0.70 annual dividend, the dividends increase by 1.6% annually, and you require a 10%
rate of return?
A. $8.29
B. $8.33
C. $8.47
D. $8.53
9. A project has an initial cost of $6,500,000. The cash inflows are $900,000, $2,200,000,
$3,600,000, and $4,100,000 over the next four years, respectively. What is the payback
period?
А. 1.73 years
В. 2.51 уears
С. 2.94 years
D. 3.51 years
10. Suppose a stock had an initial price of $80 per share, paid a dividend of $1.35 per share
during the year, and had an ending share price of $87. What was the capital gains yield?
A. 7.55%
В. 7.69%
C. 8.05%
D. 8.75%
**

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