Question 1

What is the present value of $20,000 to be received in 40 years if the interest rate is 9 percent?

Accepted Answer

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Question 2

Korea's consumer price index is expected to increase from its current level of 797 to 859 by next year. The current rate on one-year Korean government bonds is 9.5%. What is the expected real risk-free rate for Korea?

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Question 3

If you deposit $1,000 today at 12 percent, how much will you have in 10 years?

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Question 4

Calculate FV of $100,000 at the end of 64 years given an interest rate of 10.38%.

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Question 5

At the beginning of 2015, Clark's trust fund had a value of $400,000. Between the beginning of 2015 and the end of 2019, Clark's portfolio earned an arithmetic mean annual return of 7.6% and a geometric mean annual return of 6.3%. What approximate value did Clark's portfolio have at the end of 2019? Assume there were no inflow into or outflows from Clark's portfolio.

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Question 6

A U.S. investor purchased Sony bonds that were denominated in yen, had a 6.9% yield to maturity, and had one year to maturity. At the time of purchase, the exchange rate was 139 yen/$. At maturity, the exchange rate was 122 yen/$. What was the investor's annual return on the bonds?

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Question 7

John Crossborder buys 1 share of Telmex at 140 pesos when the value of the peso is stated in dollars at $0.35. One year later, Telmex is selling for 155 pesos and paid a dividend of 5 pesos at yearend. If after one year the value of pesos is $0.29, what is John's return in U.S. dollars?

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Question 8

The S&P 500 showed the following Rs for a 6-year period: 11.1 percent, -5.2 percent, 20.3 percent, 26.7 percent, -12.4 percent, and 2.2 percent.
(a) Calculate the arithmetic mean return for the 6-year period.
(b) Calculate the geometric mean return for the 6-year period.

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Quiz 6: The Risk and Return From Investing