FINAL: PRACTICE EXAM
1 out of 9
Name
(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/pencil
and 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
False
2.
If two positive-NPV projects are mutually exclusive, you should pick the
one with the higher NPV.
True
False
3.
If the IRR of a project is positive, then the project must have a positive
net present value.
True
False
4.
Suppose the firm is thinking about buying shares of stock X. In an
efficient market, this is a positive NPV investment.
True
False
5.
In making capital budgeting decisions, we should ignore opportunity
costs since they are not actual cash outflows.
True
False
6.
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
False
7.
Individuals who trade more frequently tend to outperform individuals
who follow a buy-and-hold strategy.
True
False
8.
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

**sections.**

*blurred***to view the full version.**

*Sign up*