exam2c.ch5ch5ach6ch7ch8

exam2c.ch5ch5ach6ch7ch8 - Name Webct User ID University of...

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Name __________________________________ Webct User ID __________________________________ University of Houston C. T. Bauer College of Business Principles of Financial Management Finance 3332 Exam 2C: Spring, 2009 To receive full credit: Show equations either in variable form or equations with numbers plugged in. Calculator financial function inputs must be shown. Clearly indicate your answer. Carry all decimals, rounding only final answer. Decimal places should be rounded to four places (two in decimal form) and currency answers rounded to the nearest cent, where applicable. Point values are in parentheses. Use the following information for problems 1 – 3. Stock Expected Return Beta Varianc e Covariance (σ i,j ) K 0.18 0.9 0.04 σ   K,L  = 0.048 L 0.15 1.2 0.09 σ   L,M  = 0.048 M 0.20 2.6 0.16 σ   K,M  = 0.016 1.  Calculate  the   expected return  of a  portfolio  consisting  of 40  percent  of the  funds  invested  in  stock  K and  60  percent  in stock  L. (2) 2.  Calculate  the   standard deviation  of a  portfolio  consisting  of 40  percent  of the  funds  invested   in stock  K and  60  percent  in stock  L. (8) 3.  What is the   correlation coefficient  of returns  between  stocks  K and  L? (4) 4.  How  much  would  an  investor  be  willing  to pay  for an  investment  which  pays  $8000  per  year   for 16  years,  with the  first paym ent  beginning  in 12  years,  if the  investor  requires  a  six  percent   5.  Jame s  bought  a  new  truck  and  borrowed  $18,000  at an  annual  interest  rate  of 4 percent  for 3  years.  How  much  will be  his   monthly  paym ents?  (6) 6.  What is the  value  of JRS’s  $6  preferred  stock  if the  required  rate  of return  is nine  percent?  (2)
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exam2c.ch5ch5ach6ch7ch8 - Name Webct User ID University of...

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