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##### finance homework mcq -Corporate Finance

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Question;Use the table;for the question(s) below.;Consider the;following stock price and shares outstanding data;Stock Name;Price;per Share;Shares;Outstanding (Billions);Lowes;\$28.80;1.53;Wal-Mart;\$47.90;4.17;Intel;\$19.60;5.77;Boeing;\$75.00;0.79;25) The market;capitalization for Wal-Mart is closest to;A) \$415 Billion;B) \$276 Billion;C) \$479 Billion;D) \$200 Billion;Stock Name;Price;per Share;Shares;Outstanding (Billions);Market;Capitalization (Billions);Lowes;\$28.80;1.53;\$44.06;Wal-Mart;\$47.90;4.17;\$199.74;Intel;\$19.60;5.77;\$113.09;Boeing;\$75.00;0.79;\$59.25;Total;\$416.15;26) The total;market capitalization for all four stocks is closest to;A) \$479 Billion;B) \$415 Billion;C) \$2,100;Billion;D) \$200 Billion;27) If you are;interested in creating a value-weighted portfolio of these four stocks, then;the percentage amount that you would invest in Lowes is closest to;A) 25%;B) 11%;C) 20.0%;D) 12%;28) Assume that;you have \$100,000 to invest and you are interested in creating a value-weighted;portfolio of these four stocks. The number;of shares of Wal-Mart that you would hold in your portfolio is closest to;A) 710;B) 1390;C) 1000;D) 870;29) Assume that;you have \$100,000 to invest and you are interested in creating a value-weighted;portfolio of these four stocks. The;percentage of the shares outstanding of Boeing that you would hold in your portfolio;is closest to;A).000018%;B).000020%;C).000024%;D).000031%;30) Assume that;you have \$250,000 to invest and you are interested in creating a value-weighted;portfolio of these four stocks. How many;shares of each of the four stocks will you hold? What percentage of the shares outstanding of;each stock will you hold?;S;12.3 Beta Estimation;Use the;following information to answer the question(s) below.;Year;Risk-free;Return;Market;Return;Wyatt;Oil;Return;Market;Excess;Return;Wyatt;Oil;Excess;Return;Beta;2007;3.0%;6.0%;5.5%;3.0%;2.5%;0.833;2008;1.5%;-38.5%;-32.6%;.40%;-34.1%;0.853;2009;1.0%;22.5%;19.6%;21.5%;18.6%;0.865;1) Wyatt Oil's;average historical return is closest to;A) -2.50%;B) -3.33%;C) -4.33%;D) -5.17%;2) The Market's;average historical return is closest to;A) -2.50%;B) -3.33%;C) -4.33%;D) -5.17%;3) Wyatt Oil's;average historical excess return is closest to;A) -2.50%;B) -3.33%;C) -4.33%;D) -5.17%;4) The Market's;average historical excess return is closest to;A) -2.50%;B) -3.33%;C) -4.33%;D) -5.17%;5) Wyatt Oil's;excess return for 2009 is closest to;A) 18.6%;B) 19.6%;C) 20.0%;D) 21.5%;6) The Market's;excess return for 2008 is closest to;A) -40.0%;B) -38.5%;C) -37.0%;D) -34.1%;7) Using the;average historical excess returns for both Wyatt Oil and the Market portfolio;your estimate of Wyatt Oil's Beta is closest to;A) 0.75;B) 0.84;C) 1.00;D) 1.19;Diff;3;Section: 12.3 Beta Estimation;Skill: Analytical;8) Using the;average historical excess returns for both Wyatt Oil and the Market portfolio;estimate of Wyatt Oil's Beta. When using;this beta, the alpha for Wyatt oil in 2007 is closest to;A) -0.5000%;B) -0.0250%;C) -0.0125%;D) +0.0250%;9) Using just;the return data for 2009, your estimate of Wyatt Oil's Beta is closest to;A) 0.84;B) 0.87;C) 1.00;D) 1.16;10) Using just;the return data for 2008, your estimate of Wyatt Oil's Beta is closest to;A) 0.85;B) 0.87;C) 1.00;D) 1.17;11) Which of the;following statements is false?;A) Beta is the;expected percent change in the excess return of the security for a 1% change in;the excess return of the market portfolio.;B) Beta;represents the amount by which risks that affect the overall market are;amplified for a given stock or investment.;C) It is common;practice to estimate beta based on the historical correlation and volatilities.;D) Beta measures;the diversifiable risk of a security, as opposed to its market risk, and is the;appropriate measure of the risk of a security for an investor holding the;market portfolio.;12) Which of the;following statements is false?;A) One;difficulty when trying to estimate beta for a security is that beta depends on;the correlation and volatilities of the security's and market's returns in the;future.;B) It is common;practice to estimate beta based on the expectations of future correlations and;volatilities.;C) One;difficulty when trying to estimate beta for a security is that beta depends on;investors expectations of the correlation and volatilities of the security's;and market's returns.;D) Securities;that tend to move less than the market have betas below 1.;13) Which of the;following statements is false?;A) Securities;that tend to move more than the market have betas higher than 0.;B) Securities;whose returns tend to move in tandem with the market on average have a beta of;1.;C) Beta;corresponds to the slope of the best fitting line in the plot of the securities;excess returns versus the market excess return.;D) The;statistical technique that identifies the bets-fitting line through a set of;points is called linear regression.;Use the equation;for the question(s) below.;Consider the;following linear regression model;(Ri - rf) = ai + bi(RMkt - rf) + ei;14) The bi in the regression;A) measures the;sensitivity of the security to market risk.;B) measures the;historical performance of the security relative to the expected return;predicted by the SML.;C) measures the;deviation from the best fitting line and is zero on average.;D) measures the;diversifiable risk in returns.;15) The ai in the regression;A) measures the;sensitivity of the security to market risk.;B) measures the;deviation from the best fitting line and is zero on average.;C) measures the;diversifiable risk in returns.;D) measures the;historical performance of the security relative to the expected return;predicted by the SML.;16) The ei in the regression;A) measures the;market risk in returns.;B) measures the;deviation from the best fitting line and is zero on average.;C) measures the;sensitivity of the security to market risk.;D) measures the;historical performance of the security relative to the expected return;predicted by the SML.

Paper#49436 | Written in 18-Jul-2015

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