BrainMass Quizzes Introduction to Finance This quiz test introductory finance topics. 1 If $100 today is invested at 10 percent per year compounded, what will it be worth in two years? $100 $121 $110 $120 $150 2 An annuity is defined as: A stream of cash received every year A steam of cash received at the end of every year A fixed amount of cash received at regular intervals A series of lump-sums received every month 3 Jim received $50 at the end of the year for 5 years, at which point he no longer received any funds. He received an annual interest rate of 5 percent on his investment. How much did Jim invest to receive these funds? $250.00 $1,250.00 216.47 $227.30 None of the above 4 The risk-free rate is 4 percent. The stock market is returning 13 percent. XYZ Corporation is 1.5 times as risky as the stock market. What rate of return are investors demanding on XYZ stock? 19.50 percent 19.00 percent 13.50 percent 17.50 percent 15.00 percent 5 ABC stock just paid a dividend of $2.50. Its dividend will grow by 10 percent indefinitely. Investors demand a return of 15 percent on the stock. What is the stock's current price? $55.00 $27.50 $25.00 $16.67 $18.34 6 True or False: If a stock's dividends are expected to grow at different amounts in stages, the Gordon Dividend Growth Model is the most accurate way to compute its current price. True False 7 True or False: The payback method does not account for the time value of money. True False 8 Jin Hun Company invests $100,000 in a plant. Its cash flows are $50,000 per year for the next 4 years. Its internal rate of return is: 34.90 percent 150 percent 250 percent 30.00 percent 37.90 percent 9 Jin Hun Company invests $100,000 in a plant. Its cash flows are $50,000 per year for the next 4 years. Its discount rate is 30 percent. The net present value of the investment is: $0 $150,000 $8,312 $9,312 $7,312 10 John deposits $10,000 into a bank account at the beginning of each year for 5 years. His account earns 7.5 percent interest per year. How much does John have after the final deposit? $50,000 $53,750 $61,450 $62,440 $58,084 Submit Quiz
