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Unformatted text preview: FIN4160 4160 Exam 1 Student Name________________ MC section: Please write your answer at the space provided at the end of the exam. 1. Using a discount rate of 8% per year, what is the present value of an ordinary annuity of $100 per year for 10 years? a. $1,000 b. $671 c. $887 d. $557 2. Riskier securities have _____ returns. a. higher expected b. lower realized c. higher instantaneous d. lower long-term 3. You bought 100 shares of stock at $35, received $3 per share in dividends, and sold the shares for $50. Your holding period return is a. 36% b. $1,503 c. 51.4% d. $5,300 4. You buy a stock for $50 per share. Over the next four months, it has monthly returns of 4%, 5%, 2%, and -3%. The value of a share at the end of the fourth month is a. $51.20 b. $54.02 c. $54.12 d. $56.45 5. If someone wants no chance of a loss of principal value, the appropriate primary objective is a. stability of principal b. income c. growth of income d. capital appreciation 6. Which of the following primary/secondary objective combinations is infeasible? a. Stability of principal, growth of income b. Income, growth of income c. Growth of income, capital appreciation d. Income, capital appreciation 7. To reduce the duration of a bond portfolio, managers often use a. shares of common stock b. hard asset investments c. preferred stock shares d. treasury bills 8. The single most important investment decision is a. time horizon b. investment strategy c. asset allocation d. risk assessment 9. The investment policy statement should be changed if there is a material change in a. economic conditions b. the performance of the portfolio c. the allocation of assets in the portfolio d. the clients financial condition 10. Securities A and B have expected returns of 12% and 15%, respectively. Securities A and B have expected returns of 12% and 15%, respectively....
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This note was uploaded on 05/24/2011 for the course FIN 4160 taught by Professor Chan during the Spring '11 term at Utah Valley University.
- Spring '11