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exam finance




Question;1. Investors require a 4 percent return on risk-free;investments. On a particular risky investment, investors require an excess;return of 7 percent in addition to the risk-free rate of 4 percent. What is;this excess return called?;A. Inflation premium;B. Required return;C. Real return;D. Average return;E. Risk premium;E;2.The standard deviation measures the _____ of a security's;returns over time.;A. average value;B. frequency;C. volatility;D. mean;E. arithmetic average;C;3.Aztec Movers pays a constant annual dividend of $1.55 per;share on its stock. Last year at this time, the market rate of return on this;stock was 14.8 percent. Today, the market rate has fallen to 11.2 percent. What;would your capital gains yield have been if you had purchased this stock one;year ago and then sold the stock today?;A. 18.78 percent;B. 22.03 percent;C. 28.16 percent;D. 30.00 percent;E. 32.14 percent;4. Which one of the following measures the amount of;systematic risk present in a particular risky asset relative to that in an;average risky asset?;A. Squared deviation;B. Beta coefficient;C. Standard deviation;D. Mean;E. Variance;5. Systematic risk is;A. totally eliminated when a portfolio is fully diversified.;B. defined as the total risk associated with surprise;events.;C. risk that affects a limited number of securities.;D. measured by beta.;E. measured by standard deviation.;6. Blue Lagoon stock is expected to produce the following;returns given the various states of the economy. What is the expected return on;this stock?;State of Economy;Probability of state;Rate of return;Recession.3 -.27;Normal.65.16;Boom.05.32;A. 3.90 percent;B. 4.23 percent;C. 4.51 percent;D. 5.47 percent;E. 5.92 percent;7. You own a portfolio that is invested 38 percent in stock;A, 43 percent in stock B, and the remainder in stock C. The expected returns on;these stocks are 10.7 percent, 15.4 percent, and 9.1 percent, respectively.;What is the expected return on the portfolio?;A. 10.55 percent;B. 11.02 percent;C. 11.67 percent;D. 12.42 percent;E. 13.01 percent


Paper#60768 | Written in 18-Jul-2015

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