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##### BEmidji Financial managers test 3

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Question;Question 1 (5 points) Question 1 Unsaved;The 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%;Save;Question 2 (5 points) Question 2 Unsaved;Southern 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%;Save;Question 3 (5 points) Question 3 Unsaved;Jerilu 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%;Save;Question 4 (5 points) Question 4 Unsaved;Six 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) $15;B) $30;C) $45;D) $50;Save;Question 5 (5 points) Question 5 Unsaved;You 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%;Save;Question 6 (5 points) Question 6 Unsaved;Sweet 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%;Save;Question 7 (5 points) Question 7 Unsaved;Chelsea 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%;Save;Question 8 (5 points) Question 8 Unsaved;One 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) -$4.16;B) -$3.96;C) -$3.76;D) -$3.16;Save;Question 9 (5 points) Question 9 Unsaved;You 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) $3,750;B) $4,333.33;C) $4,706.20;D) $4,943.82;Save;Question 10 (5 points) Question 10 Unsaved;A 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%;Save;Question 11 (10 points) Question 11 Unsaved;Explain and discuss the three forms of market efficiency.;Question 11 options;Spell check;Save;Question 12 (10 points) Question 12 Unsaved;Explain and discuss systematic risk and unsystematic risk.;Question 12 options;Spell check;Save;Question 13 (10 points) Question 13 Unsaved;Explain and discuss the idea of standard deviation and its;application to risk.;Question 13 options;Spell check;Save;Question 14 (10 points) Question 14 Unsaved;Explain and discuss the capital asset pricing model.;Question 14 options;Spell check;Save;Question 15 (10 points) Question 15 Unsaved;Explain and discuss the two ways of calculating the cost of equity.;Question 15 options

Paper#49317 | Written in 18-Jul-2015

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