exam2b.ch5partialch5Ach6ch7ch8

# exam2b.ch5partialch5Ach6ch7ch8 - Name Peoplesoft Number...

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Name __________________________________ Peoplesoft Number __________________________________ University of Houston C. T. Bauer College of Business Finance 3332 Fall, 2010 Exam 2B To receive full credit: Show all work—equations in variable form & equations with numbers plugged in, unless instructed differently Clearly indicate your (one) answer Calculator financial function inputs must be shown. All inputs to find annuity factor must be shown Carry all decimals, rounding only final answer Decimal places should be rounded to 4 places (2 in percent form) Currency answers rounded to the nearest cent, where applicable Include applicable units (\$, %, etc.) on answers Point values are in parentheses. 1.  a)  Rayne  borrowed  \$50,000  at an  annual  rate  of 9 percent  to be  repaid  with monthly  paym ents  over  the  next     How  much  will be  her   monthly  paym ents?  (6) (No  need  to show  equations,  but show  all calculator  inputs,  including  what is being  computed,  and  clearly  mark     answer.)     b)  If Rayne  make s  her  paym ents  at the   beginning of each  month,  how  much  will be  her  monthly  paym ents?  (4) 2.  What is the  probability of earning  a  return  greater  than  10.56  percent  on  a  stock  whose  returns  are  normally   distributed  with an  expected  return  of 30  percent  and  a  standard  deviation  of 12  percent?  (6) 3.   Determine  the  market  value  weights  of each  security  in the  following  portfolio  (fill in the  blanks;  do  not need  t   work).  (4) Stock Expected Return Investment Market Value Weight L 30% \$20,000 M 10%   10,000 N 20%   50,000

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Use the following information for problems 4 - 6. Security Expected Return Beta Standard Deviation Correlation Coefficient X 0.06 0.8 σ X  = 0.2 Ρ X,Y  = 0.2 Y 0.10 1.2 σ Y  = 0.3 Ρ X,Z  = 0.6 Z 0.14 2.0 σ Z  = 0.4 Ρ Y,Z  = 0.8 4.  Determine  the   beta of a  portfolio  consisting  of 30  percent  of the  funds  invested  in stock  Y and  70  percent  in stock   (2) 5.  Calculate  the
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exam2b.ch5partialch5Ach6ch7ch8 - Name Peoplesoft Number...

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