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SampleExam_BUSI758W_WithAnswers.docx - SAMPLE EXAM...

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SAMPLE EXAM Corporate Finance BUSI758WAnswer all questions: There are 8 multiple choice questions (worth one mark each) in section A andfour short answer format questions (worth a total of 20 marks) in section B.Section A:Multiple choice questions (there are eight questions in this section):The correct answers have asterisks next to them!1./ What kind of contract gives an investor the right to sell an asset in the future?A) Call option*B) Put optionC) BondD) Hedging
2./ Which answer below increases the size of an option premium?
3./ What is the purpose of diversification of investments?
4./ Using the Capital Asset Pricing Model, what is a project’s rate of return, if the project's beta is 0.5,the average market return is 9%, and a comparable maturity U.S. government security yield is 4%?
5./ Which of the following statements are true?A) If the firm takes on more debt, the debt becomes riskier and the cost of capital for the debtincreases.B) If the firm takes on more debt, the equity becomes riskier and the cost of capital for the equityincreases.*C) The firm also becomes riskier when the firm takes on more debt, which must mean that thefirm’s cost of capital increases.D) All statements above are correct

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Term
Spring
Professor
N/A
Tags
Capital Asset Pricing Model, Melbourne Corp, Sydney Corp

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