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### BLC Finance 300 - Practice Mid-Term 2_Answers

Course: FINANCE 300, Spring 2012
School: University of...
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University of Wisconsin-Madison - FINANCE - 300
SPRING 2012 FIN 300 MIDTERM #2 - BLC REVIEWQuestion 1: Portfolio Calculationsa. Assume you purchase 50 shares of Woods and 60 shares of Ogilvy.Other information:PriceBetaWoodsOgilvy\$25\$350.91.10.250.45Correlation between Woods &amp; Ogilvy:0.40
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin-Madison - FINANCE - 300
BLC Feb 28&amp;29; Module 5_Questions1. What is the difference between common and independent risk? What is an example of each?2. How do common and independent risk relate to systematic and unsystematic risk?3. The data below represents the returns for Nik
University of Wisconsin-Madison - FINANCE - 300
Professor Kenneth A. KavajeczWisconsin School of BusinessFIN 300: Introduction to FinanceDiscussion Section MaterialsFocusThe problems in this document are meant to supplement the lecture material. Problemsare grouped by topic/module and have a sugg
University of Wisconsin-Madison - FINANCE - 300
Professor Kenneth A. KavajeczWisconsin School of BusinessFIN 300: Introduction to FinanceDiscussion Section MaterialsFocusThe problems in this document are meant to supplement the lecture material. Problemsare grouped by topic/module and have a sugg
University of Wisconsin-Madison - FINANCE - 300
Professor Kenneth A. KavajeczWisconsin School of BusinessFIN 300: Introduction to FinanceDiscussion Section MaterialsFocusThe problems in this document are meant to supplement the lecture material. Problemsare grouped by topic/module and have a sugg
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin-Madison - FINANCE - 300
BLC March 1&amp;5; Module 5_AnswersKNOW CAPM!1. A stock has an expected rate of return of 7.9 percent and a standard deviation of 6.2 percent. Which one of the following bestdescribes the probability that this stock will lose more than 4.5 percent in any o
University of Wisconsin-Madison - FINANCE - 300
BLC March 1&amp;5; Module 5_Questions1. A stock has an expected rate of return of 7.9 percent and a standard deviation of 6.2 percent. Which one of the following bestdescribes the probability that this stock will lose more than 4.5 percent in any one given
University of Wisconsin-Madison - FINANCE - 300
BLC March 6&amp;7; Module 5_QuestionsREVIEW1. A stock has an expected rate of return of 10.5 percent and a standard deviation of 5.9 percent. What can you say with 95% confidence re:next years expected returns?2. MSFT has a beta of 1.2 and an expected ret
University of Wisconsin-Madison - FINANCE - 300
BLC March 8&amp;12; Module 6&amp;7_Questions1. Compare the Equilibrium Model and Arbitrage methods of pricing an asset.2. Describe the Law of No Arbitrage.3. Suppose there are three stocks with the following expected returns and sensitivities to one risk facto
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin-Madison - FINANCE - 300
BLC March 13&amp;14; Module 6&amp;7_Questions1. Benihana stock is trading for \$13.00 per share. The company pays all of its earnings out as dividends and the dividend pershare last year was \$1.10 (it was just paid). Management expects the dividend to grow by 10
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin-Madison - FINANCE - 300
BLC March 13&amp;14; Module 6&amp;7_Questions1. Diamond Services has two operating divisions: Cleaning and Catering, which are 60% and 40% of its totalbusiness, respectively. The following competitor companies have been identified as having investmentssimilar
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin-Madison - FINANCE - 300
BLC March 20&amp;21; Module 7&amp;8_Questions1. Fleming Co. is a conglomerate that makes beer, pizza ovens and baby clothes.The following three competitors have been identified as having investments similar to those of Fleming Cos threedivisions:70% of Flemin
University of Wisconsin-Madison - FINANCE - 300
BLC March 26; Wrap-up before 2nd midterm1. Interpret the results from the Bernard and Thomas (1989) results below. What do the results suggest about marketefficiency?2. Interpret the Keown and Pinkerton (1989) study results below regarding abnormal sto
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin-Madison - FINANCE - 300
University of Wisconsin MadisonWisconsin School of BusinessKenneth KavajeczFinance 300Introduction to Financial ManagementSpring 2012MIDTERM EXAMINATION #1NAME (Print):_Lecture (circle):8:00 (Cohort A)9:30 (Cohort B)Teaching Assistant (circle)
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Chapter 26Demand-Side Equilibrium: Unemployment or Inflation?A de finiteratio, to becalle theMultiplie can bee d r, stablishe d be e incom and inve e twe n e stm nt. JOHN MAYNARD KEYNESThe Meaning Of Equilibrium GDP Assumptions Constant Price level
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Chapter 23The Goals of Macroeconomic PolicyWhe m n aree ploye the arebe conte d. ne m d, y st nte BENJAMI N FRANKLI N I nflation is re pudiation. CALVI N COOLI DGEGoals of Macroeconomic Policy Economic growth ingredients Aggregate supply Aggregate de
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Chapter 22An Introduction to MacroeconomicsWhe thete scopee them re le nds, icroscopebe gins. Which of thetwo has thegrande vie r w? VI CTOR HUGOMacroeconomics &amp; Microeconomics Microeconomics Decisions of individual units No matter how large Macroe
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Chapter 12Between Competition and Monopoly. . . ne r fish nor fowl. ithe JOHN HEYWOODMonopolistic Competition Monopolistic competition Many buyers and sellers Freedom of exit and entry Perfect information Heterogeneous products Product differentiati
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Chapter 7Production, Inputs, and Cost: Building Blocks for Supply AnalysisOf course thats only an e ate Theactual cost will behighe , stim . r. AUTO MECHANI C TO CUSTOMERFigure 1Historical costs for long-distance telephone transmissions2Short-Run vs
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Chapter 6Demand and ElasticityA high cross e lasticity of de and [be e two goods indicate that m twe n s t he com tein thesam m t. [This can pre nt a supplie of y] pe e arke ve r oneof theproducts] fromposse ssing m onopoly powe ove price rr . DUPONT CE
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Chapter 5Consumer Choice: Individual and Market DemandEverythingisworthwhatitspurchaserwillpayforit. PUBLILIUSSYRUSScarcity and Demand Demand consumers Can pay Willing to pay Individual consumer Choices Constraint: income Income scarce Purchase d
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Chapter 4Supply and Demand An Initial LookThefreeenterprisesystemisabsolutelytooimportanttobeleft tothevoluntaryactionofthemarketplace. RICHARDKELLYThe Invisible Hand Invisible hand Adam Smith People pursue own self-interests Led by an invisible hand
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Chapter 3The Fundamental Economic Problem: Scarcity and ChoiceOur necessi ti es ar e few but our wants ar e endl ess. I N SCRI PT I ON ON A FORT U N E COOKI EScarcity, Choice, &amp; Opportunity Cost Resources; inputs; factors of production Instruments pr
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