2018 Sample Final Exam with solutions.docx

2018 Sample Final Exam with solutions.docx - CORPORATE...

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CORPORATE FINANCE Final Exam Sample with Solutions Instructions: - The point value of each question is indicated next to each question. You may earn up to a total of 100 points. - You may use Excel and/or a financial calculator, and one double-sided 3” x 5” index card, with any information included prior to the exam. - Be sure to show your work for all questions. Wrong numerical answers with work shown will receive partial credit. Therefore, work the problem through as much as you can, even if you do not complete it. Document your work and the excel formulas you use, just as I document my excel formulas on my slides. - Write legibly. Unfortunately, I cannot give you points for an answer I am unable to read. - There should be enough room to show all the work on the exam. If necessary, use backs of pages. - If you feel that not enough information is provided to answer a question, state clearly any additional assumptions you make. - You may solve the questions using either the mathematical formulas or Excel. Good Luck!
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1. (5 points) Historically, stocks have delivered a ________ return on average compared to Treasury bills but have experienced ________ fluctuations in values. a. higher, higher b. higher, lower c. lower, higher d. lower, lower Chapter 11: Risk, Return, & Slack slide 3 with chart Return from different portfolios Relationship between risk & reward Treasury bills have low risk & return High risk = high reward Bonds are less risky than stocks 2. (5 points) A project is described as having normal cash flows, meaning one outflow followed by a series of inflows. Which of the following statements about normal cash flows is CORRECT?
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