Question 10 - #93724 If X and Y are independent events, which of the following is most accurate? A) P(X | Y) = P(X). B) P(X or Y) = (P(X)) × (P(Y)). C) P(X or Y) = P(X) + P(Y).
Question 11 - #93542 A T-bill with a face value of $100,000 and 140 days until maturity is selling for $98,000. What is the effective annual yield (EAY)? A) 2.04%. B) 5.41%. C) 5.14%.
Question 12 - #93617
Question 13 - #95440 A) 5.6%. B) 6.1%. C) 5.8%.
Time-weighted returns are used by the investment management industry because they: A) result in higher returns versus the money-weighted return calculation. B) take all cash inflows and outflows into account using the internal rate of return. C) are not affected by the timing of cash flows.
The bank discount of a $1,000,000 T-bill with 135 days until maturity that is currently selling for $979,000 is: Question 14 - #96024 Calabash Crab House is considering an investment in mutually exclusive kitchen-upgrade projects with the following cash flows: Project A -$10,000 2,000 5,000 8,000 8,000 Project B -$9,000 200 -2,000 11,000 15,000
Initial Year Year 1 Year 2 Year 3 Year 4
Assuming Calabash has a 12.5% cost of capital, which of the following investment decisions is most appropriate? A) Accept Project B because its net present value is higher than that of Project A.
B) Accept Project A because its internal rate of return is higher than that of Project B. C) Accept both projects because they both have positive net present values.
Question 15 - #93713 The probability of each of three independent events is shown in the table below. What is the probability of A and C occurring, but not B? Event Probability of Occurrence A B C A) 8.9%. B) 10.5%. C) 3.8%. 25% 15% 42%
End of Year 1 2 3 4 5 6 7 8 9 Cash Flows $5,000 $5,000 $5,000 $5,000 $5,000 -0-0$2,000 $2,000
Question 16 - #93756
A firm is evaluating an investment that promises to generate the following...