428_Final_Exam_sol_09 - AEM 428 Valuation Final Exam 1 hour...

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AEM 428  Valuation    Final  Exam      1 hour 15 minutes  Part I (40 Points).  Multiple choice, 8 questions, 5 points each.     1. If financial markets are semistrong-form efficient, asset prices will incorporate __________; however, if financial markets are strong-form efficient, asset prices will reflect __________. a. all information about price trends or repeating patterns on record; all relevant current and predictable information b. all pertinent historical and current information; all information from public sources c. all information available from public sources; all pertinent historical, current and predictable future information from public and private sources d. all information relevant to the level of asset prices; all information regarding both the level and flow of asset prices e. all pertinent historical, current and predictable future information from public and private sources; all information available from public sources 2.  Which of the followings can be a sentiment indicator?   a. Stock price b. Trading  volume c. Momentum d. Both B and C e. None of above  3.  Earnings manipulation is: a. The same as earnings management b. Aggressive accounting and/or fraud c. The result of conservative accounting d. The application of accrual accounting e. None of the above 4.  Which of the following is often used for earnings smoothing? a. Hiding inventory b. Cookie jar reserves c. Deferring costs d. Large non-recurring items
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All of the above 5.  Which of the following is  not  true?  Earnings Management could be _____ a. Fraud  b. Legal c. Misstatements  d. Unintentional  mistakes 6. If you long a call or long a put you should not exercise your option at the expiry date if ___ a. The option is in-the-money b. The option is break-even c. The option it out-of-the-money d. The options’ net payoff is negative 7. XYZ's stock price is currently $30, it has an annual standard deviation of 30 percent, and pays no dividends. You have purchased a call option priced at $2.89 on XYZ stock that has an exercise price of $30 and a time to expiration of six months. The breakeven stock price at expiration on the transaction is __________. a. $27.11 b. $29.97 c. $30.00 d. $30.03 e. $32.89 8. You know the followings about a European call option. Time to maturity: 3 months Standard Deviation:  50% per year Strike Price: $50 Stock Price: $50 Interest Rate: 10%  The call price of Black-Scholes model is ______. a.
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428_Final_Exam_sol_09 - AEM 428 Valuation Final Exam 1 hour...

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