FINAL: PRACTICE EXAM 1 out of 9Name (no nicknames, please): ________________________________________ Circle your Section #:XXX XXX XXX (XXX – XXX) (XXX – XXX) (XXX – XXX) 1.You are only allowed to have with you a pen/penciland a calculator(no books, notes, computers, phones, etc). Extra scratch paper will be provided if you need it. You must have your own calculator (no sharing). 2.Round your interim work and final answers to the nearest three decimal places, and write your final answer in the provided boxes. You must show work where applicable.3.You have 120 minutes to complete the exam. There are XXX pages and 20 questions. Maximum possible score is 100 out of 100. True/False (4 points each / Total = 32 points) 1. For stocks, the number of short positions must equal the number of long positions. True False2. If two positive-NPV projects are mutually exclusive, you should pick the one with the higher NPV. True False3. If the IRR of a project is positive, then the project must have a positive net present value. True False4. Suppose the firm is thinking about buying shares of stock X. In an efficient market, this is a positive NPV investment. True False5. In making capital budgeting decisions, we should ignore opportunity costs since they are not actual cash outflows. True False6. If the firm uses its WACC to evaluate all potential projects, then it will likely over-estimate the value of a high-risk project. True False7. Individuals who trade more frequently tend to outperform individuals who follow a buy-and-hold strategy. True False8. Whether or not the underlying stock pays dividends, an American call option is always more valuable the longer its time to expiration. True False
This preview has intentionally blurred sections.
Sign up to view the full version.