FIN 564 FIN564 Midterm Answers (Keller)

FIN 564 FIN564 Midterm Answers (Keller)


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FIN 564 Midterm (Keller)

  1. (TCO A) Of the following, the most likely effect of an increase in income tax rates would be to
  2. (TCO A)  An individual actually earned a 4% nominal return last year. Prices went up by 3% over the year. Given that the investment income was subject to a federal tax rate of 28% and a state, and local tax rate of 6%, what was the investor's actual real after tax rate of return?
  3. (TCO B)  A 10-year annual payment corporate coupon bond has an expected return of 11% and a required return of 10%. The bond's market price is
  4. (TCO B) Convexity arises because
  5. (TCO B) The major liability of the Federal Reserve is _____
  6. (TCO B)  The Fed increases bank reserves in the system by $75 million. If there are no drains, the expected change in bank deposits is _____.
  7. (TCO C) Oceanside bank converts a dollar of equity into 10 cents of net income and has $9.50 in assets per dollar of equity capital. Oceanside also has a profit margin of 15%. What is Oceanside's AU ratio?
  8. (TCO C) Loans past due 90 days or more, and loans that are not accruing interest because of problems of the borrower are called _____.
  9. (TCO C) Which one of the following is the definition of the NIM?
  10. (TCO C) A bank that has an equity to asset ratio equal to 12% can normally lend no more than _____ of its assets to any one borrower.

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