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

Exam December 16, 2014, questions and answers
Financial Management (Vrije Universiteit Amsterdam)
Verspreiden niet toegestaan | Gedownload door Robbert Bon ([email protected])
lOMoARcPSD

Faculty of Economics and Business Administration
Exam: Financial Management 2.2 BK / IBA Version A
Code: 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

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, Tt he 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

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