Deck 12: Annuities, Stocks, and Bonds

Question 1

A company reports net earnings of $2.50 on stock selling at $45.25. Rounded to the nearest whole number, the price-earnings ratio is 12.

Answer 1

False

Question 2

Mindy deposited $1,875 annually at a rate of 3%. What was the amount of an ordinary annuity after 13 years?

A) $29,283.36
B) $28,388.33
C) $5,795.44
D) $120.06

Answer 2

A

Question 3

Miguel has 200 shares of a cell phone company's common stock. There are dividends of $500,000 to be distributed among its common stockholders. There are 175,000 shares of common stock outstanding. How much will Miguel receive?

A) $2.86
B) $70
C) $572
D) $875

Answer 3

C

Question 4

Juanita is considering the purchase of 7 bonds. What is the annual interest for the bonds when the settlement date is on the interest date?
Face value of each bond: $525
Price per bond: 78.75%
Interest rate: 8.35%
Commission per $1,800 bond: $18

A) $10.52
B) $99.23
C) $306.86
D) $2,894.06

Question 5

Brandon deposited $3,600 annually at a rate of 4%. What was the amount of an ordinary annuity after 12 years?

A) $239.59
B) $54,092.92
C) $60,731.78
D) $65,850.88

Question 6

A corporation has 120,000 shares of common stock. The corporation had total earnings of $700,000, of which $250,000 was distributed to its stockholders. What is the earnings per share?

A) $0.36
B) $0.48
C) $2.08
D) $2.80

Question 7

Jean wants to have $5,000 in her sinking fund in 8 years at 5%. How much money should she make in yearly payments?

A) $1,160.05
B) $852.30
C) $572.35
D) $523.60

Question 8

Mary is considering the purchase of 5 bonds. What is the market value of these bonds?
Face value of each bond: $500
Price per bond: 75.5%
Interest rate: 9.25%
Commission per $500 bond: $5

A) $231.25
B) $1,887.50
C) $2,642.50
D) $18,875

Question 9

An ordinary annuity is an annuity having no fixed number of payments but depending on an uncertain event, such as life insurance payments ceasing at the death of the insured.

Question 10

Steve purchased 200 shares of stock at $14.25 per share. The commission is 2% of the total transaction. What is the total cost of the transaction?

A) $2,907
B) $2,850
C) $2,793
D) $57

Question 11

Mrs. Leary set up an investment program using an annuity due with payments of $500 at the beginning of each month. What is the amount of the annuity if she makes payments for 3 years in an account paying 12% compounded monthly?

A) $21,538.44
B) $21,753.83
C) $22,253.83
D) $22,753.83

Question 12

Keisha deposited $1,200 annually at a rate of 6%. What was the amount of an ordinary annuity after 3 years?

A) $1,272
B) $2,472
C) $2,620.32
D) $3,820.32

Question 13

A bond is a certificate issued by a corporation, the federal government, or a municipality whereby the issuer promises to repay the borrowed money at some specific time plus any interest earned.

Question 14

Megan has 700 shares of a Building Finder's common stock. There are dividends of $320,000 to be distributed among its common stockholders. There are 65,000 shares of common stock outstanding. How much will Megan receive?

A) $142.19
B) $3,003
C) $3,444
D) $61,556

Question 15

Earnings per share are portions of a corporation's profits paid to its stockholders.

Question 16

A manufacturing company pays an annual dividend of $4.16 and lists a closing price of $130. What is the current percent yield?

A) 0.032%
B) 0.32%
C) 3.2%
D) 32%

Question 17

Lydia wants to have $3,800 in her sinking fund in 4 years at 8%. She should make quarterly payments of $156.41.

Question 18

What is the amount of the annuity due if there are payments of $100 semiannually for 9 years at 6%?

A) $241.17
B) $251.17
C) $2,411.69
D) $2,511.69

Question 19

Marty purchased 290 shares of stock at $11.55 per share. The commission is 4% for round lots and an additional 5% for odd lots. What is the total cost of the transaction?

A) $51.75
B) $92.40
C) $3,349.50
D) $3,493.65

Question 20

The Board of Directors of Ross Corp. has decided to distribute $300,000 to its stockholders. There are 62,000 shares of 6% preferred stock, $75 par value, and 4,800 shares of common stock. What is the dividend per share to be paid to common stockholders?

A) $4.38
B) $4.50
C) $21,000
D) $279,000

Question 21

David is considering the purchase of 12 bonds. What is the commission on this transaction?

Face value of each bond: $800
Price per bond: 68.25%
Interest rate: 8.75%
Commission per $2,500 bond: $25

Question 22

A corporation has 300,000 shares of common stock. The corporation had total earnings of $850,000, of which $440,000 was distributed to its stockholders. What is the earnings per share?

Question 23

Carla is considering the purchase of 35 bonds. What is the total expenditure for these bonds?

Face value of each bond: $1,150
Price per bond: 82.5%
Interest rate: 9.325%
Commission per $1,750 bond: $17.50

Question 24

A $1,900 bond at a 11.65% interest rate is purchased at 80% of face value. What is the rate of annual yield to the investor? Assume the bond is purchased on the interest date.

A) 14%
B) 16%
C) 81%
D) 99%

Question 25

A $2,200 bond at a 10.9% interest rate is purchased at 70% of face value. What is the rate of annual yield to the investor? Assume the bond is purchased on the interest date.

Question 26

A company reports net earnings of $3.10 on stock selling at $52.40. What is the price-earnings ratio? Round to the nearest whole number.

Question 27

An Excel spreadsheet contains the following information about annuities: Column A: Payment, Column B: Rate, Column C: Compounded, Column D: Years, Column E: Total Annuity Investment, Column F: Present Value Factor, Column G: Present Value of Annuity Investment, Column H: Total Interest. Which is the formula needed in Column G to calculate the Present Value of Annuity Investment?

A) =ROUND((B6*E6),2)
B) =ROUND((A6*F6),2)
C) =ROUND((A6*B6*D6),2)
D) =ROUND((E6*F6),2)

Question 28

Dale wants to have $50,000 in his sinking fund in 10 years at 3%. How much money should he make in semiannual payments?

Question 29

A restaurant owner sets up a sinking fund to purchase a new building to expand its business. The factor from the sinking fund table is stored in Cell B4 and the cost is in Cell B3. Which is the correct way to enter the formula for the periodic deposit using an absolute cell reference?

A) =B3*B4
B) =$B3*$B4
C) =$B$3*B4
D) =B3*$B$4

Question 30

Face value is the amount of money paid to the _________ when the bond matures, not including __________.

Question 31

The present value of an annuity is the amount needed to invest _________ to receive a stream of payments for a given number of years in the __________.

Question 32

Juan deposited $350 quarterly at a rate of 6%. What was the amount of an ordinary annuity after 11 years?

Question 33

What is the present value of yearly payments of $1,500 at 10% in 7 years?

Question 34

Tasha deposited $800 annually at a rate of 8%. What was the amount of an ordinary annuity after 3 years?

Question 35

Kathy purchased 300 shares of stock at $10.95 per share. The commission is 3% of the total transaction. What is the total cost of the transaction?

Question 36

Which method is most efficient for adding cells in Excel that are not contiguous?

A) AutoSum
B) Individually key each cell address
C) Pointing method
D) Selection method

Question 37

Whitney is considering the purchase of 75 bonds. What is the commission on this transaction?

Face value of each bond: $850
Price per bond: 49.5%
Interest rate: 17.45%
Commission per $1,900 bond: $19

Question 38

Kaitlyn wants to have $25,000 in her sinking fund in 12 years at 8%. How much money should she make in quarterly payments?

Question 39

Jennifer purchased 340 shares of stock at $12.15 per share. The commission is 2% for round lots and an additional 6% for odd lots. What is the total cost of the transaction?

Question 40

Mathematics Corp. will distribute $129,000 to its stockholders. There are 14,000 shares of 8% preferred stock, $80 par value, and 3,600 shares of common stock. What is the dividend per share to be paid to common stockholders?

Question 41

Read the following bond market report from left to right for South Bundett Corporation. Provide the information requested.

Bonds Current Yield Volume Traded Last Net Change
SoBun 7 a 18 8.2 48 57 +2

SoBuns __________________________________________________________

7 __________________________________________________________

a __________________________________________________________

18 __________________________________________________________

8.2 __________________________________________________________

48 __________________________________________________________

57 __________________________________________________________

+2 __________________________________________________________

Question 42

A sales company pays an annual dividend of $3.02 and lists a closing price of $112. What is the current percent yield?

Question 43

Todd purchased 270 shares of stock at $13.25 per share. The commission is 1.5% for round lots and an additional 5% for odd lots. What is the total cost of the transaction?

Question 44

Mr. Noonan set up an investment program using an annuity due with payments of $750 at the beginning of each quarter. What is the amount of the annuity if he makes payments for 8 years in an account paying 10% compounded quarterly?

Question 45

An Excel spreadsheet is being created as a record of bond purchases. The following columns have values entered: Column A: Number of Bonds Purchased, Column B: Face Value of Each Bond, Column C: Percent Price, Column E: Interest Rate. What are the Excel formulas for Column D: Market Value, Column F: $10 Commission per $1,000 Bond, and Column H: Annual Interest All Bonds? Use Row 2 in formulas.

Question 46

A $700 bond at a 15.25% interest rate is purchased at 90% of face value. What is the rate of annual yield to the investor? Assume the bond is purchased on the interest date.

Question 47

Randy is considering the purchase of 20 bonds. What is the total expenditure for these bonds?

Face value of each bond: $1,200
Price per bond: 55.5%
Interest rate: 12.125%
Commission per $1,500 bond: $15

Question 48

What is the amount of the annuity due if there are payments of $250 quarterly for 3 years at 12%?

Question 49

Tabitha is considering the purchase of 25 bonds. What is the annual interest for the bonds when the settlement date is on the interest date?

Face value of each bond: $900
Price per bond: 68.15%
Interest rate: 10.65%
Commission per $1,000 bond: $10

Question 50

Tyler deposited $2,200 annually at a rate of 2.5%. What was the amount of an ordinary annuity after 15 years?

Question 51

Flint purchased 430 shares of stock at $15.65 per share. The commission is 2.5% for round lots and an additional 4% for odd lots. What is the total cost of the transaction?

Question 52

Tony has 325 shares of a computer manufacturer's common stock. There are dividends of $1,500,000 to be distributed among its common stockholders. There are 575,000 shares of common stock outstanding. How much will Tony receive?

Question 53

Brent Burns uses Excel to prepare overviews of his investors portfolios including the percent increase or decrease of each of their investments. How could Brent use the formatting in Excel to draw attention to any investments whose value decreased since their previous meeting?

Question 54

Bill purchased 100 shares of stock at $24.05 per share. The commission is 2.5% of the total transaction. What is the total cost of the transaction?

Question 55

A corporation has 125,500 shares of common stock. The corporation had total earnings of $1,460,000, of which $650,000 was distributed to its stockholders. What is the earnings per share?