FM 2014 december q_a.pdf - lOMoARcPSD Exam questions and answers Financial Management(Vrije Universiteit Amsterdam Verspreiden niet toegestaan |

FM 2014 december q_a.pdf - lOMoARcPSD Exam questions and...

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Exam December 16, 2014, questions and answersFinancial Management (Vrije Universiteit Amsterdam)Verspreiden niet toegestaan | Gedownload door Robbert Bon ([email protected])lOMoARcPSD
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Faculty of Economics and Business Administration Exam: Financial Management 2.2 BK / IBA Version ACode: E_BK2_FM / E_IBA2_FM Examinator: Dr. Vincent van Kervel Co-reader: . Date: Dec 16, 2014 Time: 12.00 Duration: 2 hours Calculator allowed: Yes Graphical calculator allowed: Yes Number of questions: 40 Type of questions: multiple choice Answer in: English Credit score: Grade 6 will be given for 27 correct answers (with reservations) Grades: The grades will be made public on: January 13 Inspection: January 16, 16.00-17.00 (room will be announced) Number of pages: (14 (including front page and formula sheet)) Good luck! Remarks: Verspreiden niet toegestaan | Gedownload door Robbert Bon ([email protected])lOMoARcPSD
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For version B: Questions 1-21 in version A correspond to 20-40 in version B. Questions 22-40 in version A correspond to 1-19 in version B. 1) Which of the following statements is FALSE? D Consider the following probability distribution of returns for Alpha Corporation: Current Stock Price ($) Stock Price in One Year ($) Probability PR $350 25% $250 $250 50% $200 25% 2) The variance of the return on Alpha Corporation is closest to: B 3) Common risk is also called: B 4) Which of the following statements is FALSE? A) Because investors are risk averse, they will demand a risk premium to hold unsystematic risk. B) By adding stocks, Tthe volatility in of a large portfolio will decline until only the systematic risk remains. C) When we combine many stocks in a large portfolio, the firm-specific risks for each stock will Verspreiden niet toegestaan | Gedownload door Robbert Bon ([email protected]) lOMoARcPSD
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average out and be diversified. D) The risk premium of a security is determined by its systematic risk and does not depend on its diversifiable risk. Answer: Explanation: A) Because investors are risk averse, they will demand a risk premium to hold systematic risk. A
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