Vocabulary
If you have $50,000 to invest and you allocate 40% to Stock A with an expected return of 8% and 60% to Stock B with an expected return of 12%, what is the expected return of the portfolio?
(0.40 * 0.08) + (0.60 * 0.12) = 0.032 + 0.072 = 0.104 or 10.4%.
A company has fixed costs of $5,670 and variable costs of $1.50 per widget. What is the expense function?
E=$1.5q+$5670
You are considering two loan options. Loan A offers a $100,000 loan with an interest rate of 5% for 10 years, while Loan B offers a $100,000 loan with an interest rate of 4.5% for 15 years. Which loan has a lower monthly payment amount?
Loan B has a lower monthly payment amount, $760.03.
You deposit $5,000 into a bank account that earns an annual interest rate of 3%. How much interest will you earn after 2 years?
($5,000 * 0.03 * 2)
$300
If a company has an expected dividend of $2 per share, a required rate of return of 10%, and a constant growth rate of 5%, what is the value of the stock using the Gordon Growth Model?
Value = Dividend / (Rate of Return - Growth Rate). $2 / (0.10 - 0.05) = $40
A company's revenue is $50,000, and its expenses are $35,000. What is the company's net profit?
$15,000
You deposit $1,500 per year into a retirement account that earns an annual interest rate of 8%, compounded annually, for 20 years. How much will be in the account at the end of the 20-year period?
$70,686.92
What financial ratio measures a company's ability to meet its short-term obligations and is calculated by dividing current assets by current liabilities?
What is the current ratio?
A 2 for 3 split occurs you have 450 shares how many shares will you have after the split.
300
An investment of $500,000 generates an annual profit of $80,000 for three years. What is the ROI?
(($80,000 * 3) / $500,000) x 100)
16%
How much more would you pay on your monthly payment for a $150,000 30 year loan 4.5% loan compared to a 15 year loan?
$387.46
How much more money would you have if you deposited 150 dollars in your account as opposed to 225 dollars every month for 5 years at 5.75% interest.
$15,129.25 - $10,086.17 = 5043.08
What financial concept calculates the present value of cash inflows and outflows to determine the profitability of an investment or project?
Net Present Value (NPV)
If a company declares a dividend of $0.50 per share and you own 500 shares, how much dividend income will you receive?
$0.50 * 500 = $250.
A product has a selling price of $20 per unit, variable costs of $12 per unit, and fixed costs of $30,000. How many units must the company sell to break even?
$30,000 / ($20 - $12) = 5,000
$5,000
The total Paid for a $3000, 6 year loan at 9.8%.
$3980.16
How much money would you have in the bank if you deposited 50,000 dollars in the bank and made no more deposits and left it there for 10 years at 4.5% interest.
77,648.47
the interest on savings calculated on both the initial principal and the accumulated interest from previous periods.
Compound interest
If the risk-free rate is 4%, the market risk premium is 8%, and the beta of a stock is 1.5, what is the expected return of the stock according to CAPM?
Expected Return = Risk-Free Rate + (Beta * Market Risk Premium)
4% + (1.5 * 8%) = 4% + 12% = 16%.
The interest on a $50,000 dollar 5.6% interest loan for 15 years.
$24,016
How much money would you have in the bank if you deposited $450 dollars every month for 15 years at 5.6% interest with annual compounds?
121,927.11