Practice Final Fall 2007

# Practice Final Fall 2007 - HADM225 Practice Final Name 1 A...

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HADM225 Practice Final Name:_________________________________________________________ 1. A stock has an expected rate of return of 8.3 percent and a standard deviation of 6.4 percent. Which one of the following best describes the probability that this stock will lose 11 percent or more in any one given year? A. less than 0.5 percent B. less than 1.0 percent C. less than 1.5 percent D. less than 2.5 percent E. less than 5 percent 2. One year ago, you purchased a stock at a price of \$32 a share. Today, you sold the stock and realized a total return of 25 percent. Your capital gain was \$6 a share. What was your dividend yield on this stock? A. 1.25 percent B. 3.75 percent C. 6.25 percent D. 18.75 percent E. 21.25 percent 3. The U.S. Securities and Exchange Commission periodically charges individuals for insider trading and claims those individuals have made unfair profits. Based on this fact, you would tend to argue that the financial markets are at best _____ form efficient. A. weak B. semiweak C. semistrong D. stron g E. perfect 4. If you excel in analyzing the future outlook of firms, you would prefer that the financial markets be ____ form efficient so that you can have an advantage in the marketplace. A. weak B. semiweak C. semistrong D. stron g E. perfect 5. The linear relation between an asset's expected return and its beta coefficient is the: A. reward-to-risk ratio. B. portfolio weight. C. portfolio risk. D. security market

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line . E. market risk premium.
6. Which of the following are examples of nondiversifiable risks? I. the inflation rate spikes nationwide II. an unexpected terrorist event occurs III. the price of lumber suddenly spikes IV. taxes are increased on hotels A. I and III only B. II and IV only C. I and II only D. II and III only E. I, II, and IV only 7. The market has an expected rate of return of 9.8 percent. The long-term

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Practice Final Fall 2007 - HADM225 Practice Final Name 1 A...

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