Introduction & Financial Markets

Practice Set 1: Introduction & Financial Markets

Test your understanding of time value of money, bond valuation, and stock valuation

12 Practice Questions0/12 CompletedImmediate Feedback

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Question 1: Time Value of Money

You invest $10,000 at 6% annual interest rate. What will be the value after 3 years with compound in...

Beginner

Question 2: Present Value

What is the present value of $5,000 to be received in 4 years if the discount rate is 8%?...

Beginner

Question 3: Bond Pricing

A bond with face value $1,000, 5% annual coupon, and 3 years to maturity trades at 8% yield. What is...

Intermediate

Question 4: Stock Valuation - Constant Growth

A stock just paid a $2.00 dividend. Dividends are expected to grow at 4% per year. If the required r...

Intermediate

Question 5: Yield to Maturity

A 2-year bond with 6% annual coupon sells for $980. Face value is $1,000. What is closest to its YTM...

Advanced

Question 6: Perpetuity

A preferred stock pays $5 annually forever. If the required return is 8%, what is its value?...

Beginner

Question 7: Annuity

You will receive $1,000 at the end of each year for 5 years. If the discount rate is 6%, what is the...

Intermediate

Question 8: P/E Ratio Valuation

A company has EPS of $4.00. Similar companies trade at P/E of 15. What is the estimated stock price?...

Beginner

Question 9: Two-Stage DDM

A stock pays $1.50 dividend. It will grow at 10% for 2 years, then 4% forever. Required return is 12...

Advanced

Question 10: Bond Duration Concept

Which bond has the highest duration (interest rate risk)?...

Intermediate

Question 11: Compound Interest Frequency

You invest $5,000 at 12% annual rate compounded quarterly for 2 years. What is the future value?...

Intermediate

Question 12: Real vs Nominal Returns

An investment earned 10% nominal return. Inflation was 3%. What is the approximate real return?...

Intermediate