FINANCE II - FINANCE II > COURSEWORK > REVIEW ASSESSMENT...

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FINANCE II > COURSEWORK > REVIEW ASSESSMENT: UNIT 2 TEST Review Assessment: UNIT 2 TEST Name UNIT 2 TEST Status Completed Score 86 out of 100 points Instructions Question 1 1 out of 1 points The firm's highest risk-adjusted discount should be applied to Selected Answer: C. a new product in a foreign market. Correct Answer: C. a new product in a foreign market. Feedback: correct Block - Chapter 013 #61 Bloom's: Understanding Difficulty: Medium Learning Objective: 3 Question 2 1 out of 1 points In order to reduce risk in a firm, the firm would seek to enter a business that Selected Answer: C. has high negative correlation with its present business. Correct Answer: C. has high negative correlation with its present business. Feedback: correct Block - Chapter 013 #75 Bloom's: Understanding Difficulty: Easy Learning Objective: 5 Question 3 1 out of 1 points Place the following investment decisions in order from the lowest risk to the highest risk: a) purchase of replacement machinery b) new product in a foreign market c) new product in the local market d) repair of existing machinery Selected Answer: D. d, a, c, b Correct Answer: D. d, a, c, b
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Feedback: correct AACSB: Analytical Skills Block - Chapter 013 #66 Bloom's: Analysis Difficulty: Medium Learning Objective: 3 Question 4 1 out of 1 points In order to evaluate risk, management may also set qualitative risk classes. Rank these four projects from the least to the most risky. 1. Completely new market in United States. 2. Completely new market in South America. 3. Addition to normal product line. 4. Repair to old machinery. Selected Answer: A. 4, 3, 1, 2 Correct Answer: A. 4, 3, 1, 2 Feedback: correct AACSB: Analytical Skills Block - Chapter 013 #65 Bloom's: Analysis Difficulty: Medium Learning Objective: 3 Question 5 1 out of 1 points The term "risk averse" means that Selected Answer: C. an individual will seek to avoid risk or be compensated with a higher return. Correct Answer: C. an individual will seek to avoid risk or be compensated with a higher return. Feedback: correct Block - Chapter 013 #43 Bloom's: Knowledge Difficulty: Easy Learning Objective: 2 Learning Objective: 3 Question 6 0 out of 1 points Buchanan Corp. forecasts the following payoffs from a project: What is the expected value of the outcomes?
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Selected Answer: C. $5,300 Correct Answer: D. The forecast is incorrect and must be modified before finding the expected value. Feedback: incorrect AACSB: Analytical Skills Block - Chapter 013 #51 Bloom's: Application Difficulty: Hard Learning Objective: 1 Question 7 1 out of 1 points A correlation coefficient of _____ provides the greatest risk reduction. Selected Answer: B. 1 Correct Answer: B. 1 Feedback: correct Block - Chapter 013 #81 Bloom's: Understanding Difficulty: Medium Learning Objective: 5 Question 8 1 out of 1 points A project's coefficient of variation is 0.40. The project has a positive coefficient of correlation of 0.20. The expected value is $2,000. What is one standard deviation?
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