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##### Financial managers test 3-The common stock of Air United, Inc., had annual returns of 15.6 percent

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Question;Question 1 (5 points) Question 1 UnsavedThe common stock of Air United, Inc., had annual returns of 15.6 percent, 2.4 percent, -11.8 percent, and 32.9 percent over the last four years, respectively. What is the standard deviation of these returns?Question 1 options:A) 13.29%B) 14.14%C) 16.50%D) 19.05%SaveQuestion 2 (5 points) Question 2 UnsavedSouthern Home Cookin' just paid its annual dividend of $0.65 a share. The stock has a market price of $13 and a beta of 1.12. The return on the U.S. Treasury bill is 2.5 percent and the market risk premium is 6.8 percent. What is the cost of equity?Question 2 options:A)9.98%B) 10.04%C) 10.12%D) 10.37%SaveQuestion 3 (5 points) Question 3 UnsavedJerilu Markets has a beta of 1.09. The risk-free rate of return is 2.75 percent and the market rate of return is 9.80 percent. What is the risk premium on this stock?Question 3 options:A) 6.47%B) 7.03%C) 7.68%D) 8.99%SaveQuestion 4 (5 points) Question 4 UnsavedSix months ago, you purchased 100 shares of stock in Global Trading at a price of $38.70 a share. The stock pays a quarterly dividend of $0.15 a share. Today, you sold all of your shares for $40.10 per share. What is the total amount of your dividend income on this investment?Question 4 options:A) $15B) $30C) $45D) $50SaveQuestion 5 (5 points) Question 5 UnsavedYou recently purchased a stock that is expected to earn 22 percent in a booming economy, 9 percent in a normal economy, and lose 33 percent in a recessionary economy. There is a 5 percent probability of a boom and a 75 percent chance of a normal economy. What is your expected rate of return on this stock?Question 5 options:A) -3.40%B) -2.25%C) 1.25%D) 2.60%SaveQuestion 6 (5 points) Question 6 UnsavedSweet Treats common stock is currently priced at $19.06 a share. The company just paid $1.15 per share as its annual dividend. The dividends have been increasing by 2.5 percent annually and are expected to continue doing the same. What is this firm's cost of equity?Question 6 options:A) 6.03%B) 6.18%C) 8.47%D) 8.68%SaveQuestion 7 (5 points) Question 7 UnsavedChelsea Fashions is expected to pay an annual dividend of $0.80 a share next year. The market price of the stock is $22.40 and the growth rate is 5 percent. What is the firm's cost of equity?Question 7 options:A) 7.58%B) 7.91%C) 8.24%D) 8.57%SaveQuestion 8 (5 points) Question 8 UnsavedOne year ago, you purchased a stock at a price of $32.16. The stock pays quarterly dividends of $0.20 per share. Today, the stock is selling for $28.20 per share. What is your capital gain on this investment?Question 8 options:A) -$4.16B) -$3.96C) -$3.76D) -$3.16SaveQuestion 9 (5 points) Question 9 UnsavedYou have a $12,000 portfolio which is invested in stocks A and B, and a risk-free asset. $5,000 is invested in stock A. Stock A has a beta of 1.76 and stock B has a beta of 0.89. How much needs to be invested in stock B if you want a portfolio beta of 1.10?Question 9 options:A) $3,750B) $4,333.33C) $4,706.20D) $4,943.82SaveQuestion 10 (5 points) Question 10 UnsavedA stock had returns of 11 percent, -18 percent, -21 percent, 5 percent, and 34 percent over the past five years. What is the standard deviation of these returns?Question 10 options:A) 18.74%B) 20.21%C) 20.68%D) 22.60%SaveQuestion 11 (10 points) Question 11 UnsavedExplain and discuss the three forms of market efficiency.Question 11 options:Spell checkSaveQuestion 12 (10 points) Question 12 UnsavedExplain and discuss systematic risk and unsystematic risk.Question 12 options:Spell checkSaveQuestion 13 (10 points) Question 13 UnsavedExplain and discuss the idea of standard deviation and its application to risk.Question 13 options:Spell checkSaveQuestion 14 (10 points) Question 14 UnsavedExplain and discuss the capital asset pricing model.Question 14 options:Spell checkSaveQuestion 15 (10 points) Question 15 UnsavedExplain and discuss the two ways of calculating the cost of equity.Question 15 options

Paper#47697 | Written in 18-Jul-2015

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