Reference no: EM132499782
1. The law of one price states that _____. everything should have the same price.
two identical assets should cost the same
purchasing power parity will equalize prices.
you should buy low and sell high
2. How can we calculate the value of an entire firm? Check all that apply:
As all future net earnings
As all future cash inflows minus outflows
As the sum of outstanding stocks and liabilities
As all future revenue
3. You invest $2,700 in a 5-year certificate of deposit (CD) that pays 2.1% interest, compounded annually. How much money will you have when the CD matures?
4. The annual interest rate is 4%.What is the present value (PV) of $1,000 that you'll receive in 19 years?
5. You have $4,000 in your savings account, and want to buy a car for $30,000.If you want to buy the car in 7 years, what interest rate would you need to earn?
6. Your annoying neighbors always boast that their home doubled in value in 12 years.If their claim is true, what annual return does it imply?
7. You have $6,000 in your savings account, and want to buy a car for $25,000.If you are not earning any more money and the interest rate on your savings account is 5% per year, how many years do you have to wait before you can buy the car?
8. You expect to receive two cash flows: $11,000 paid in 3 years and $22,000 paid in 6 years. The annual interest rate is 3%. What is the present value of the combined cash flows?