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Name
Section
ID #
Professor Bert Kohen B (Tuesdays/Thursdays, 47 pm), and Professor Tissenbaum’s
Sections D (Tuesdays/Thursdays, 710 pm)
AK/ADMS 3530.03 Finance Final Exam
Summer S1 2007
June 20, 710pm
Type A Exam
This exam consists of
50 multiple choice questions
and carries a total of
100 points
.
Choose the response which best answers each question.
Circle your answer below
,
and fill in your answers on the bubble sheet
.
Only the bubble sheet is used to
determine your exam score
.
Please do
not
forget to write your name and ID # at the
top of this cover page and on the bubble sheet. Also please write the type of your exam
(A or B) on the bubble sheet.
Please note the following points
:
1)
Read the questions carefully and use your time efficiently
.
2) Choose the answers that are
closest
to yours, because of possible rounding.
3) Keep at least
2
decimal places in your calculations and final answers.
4) Each question is worth 2 points.
5) Unless otherwise stated, interest rates are
annual
, and bonds have a
face value (or par value) of
$1,000
.
6) You may use the back of the exam paper as your scrap paper.
Page 1
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View Full Document 1. What is the standard deviation of a portfolio's returns if the mean return is 15 percent,
the variance of returns is 184, and there are three stocks in the portfolio?
A)
7.83 percent
B)
13.56 percent
C)
41.00 percent
D)
225.00 percent
Ans: B
Response:
standard deviation =
VAR
=
184
= 13.56%
2. When a project's internal rate of return equals its opportunity cost of capital, then:
A)
the project should be rejected.
B)
the project has no cash inflows.
C)
the net present value will be positive.
D)
the net present value will be zero.
Ans: D
3. What dividend is paid on preferred stock if investors require a 9 percent rate of return
and the stock has a market value of $54.00 per share and a book value of $50.00 per
share?
A)
$2.92
B)
$4.50
C)
$4.68
D)
$4.86
Ans: D
Response:
9% = Dividend/Price
9% = 4.86/54.00
4. common stock is held for two years, during which time it receives an annual dividend of
$10.
The stock was sold for $100 and generated an average annual return of 16 percent.
What price was paid for the stock?
A)
$61.60
B)
$64.80
C)
$88.00
D)
$90.90
Ans: D
Response:
.32 =
P
20
P
100
+

.32P = 120 – P
P = $90.91
5. What is the most likely value of the PVGO for a stock with current price of $50,
expected earnings of $6 per share, and a required return of 20 percent?
A)
$10
B)
$20
C)
$25
D)
$30
Ans: B
Response:
With 100 percent payout ratio, the stock would be valued at $30 ($6/.2 = $30). Thus, the $20 of
additional price must represent PVGO
6. What percentage change in sales occurs if profits increase by 3 percent when the firm's
degree of operating leverage is 4.5?
A)
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This note was uploaded on 04/11/2011 for the course ADMS 3530 taught by Professor Unknown during the Spring '09 term at York University.
 Spring '09
 UNKNOWN

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