EXAM II--sample

EXAM II--sample - Student Name _ FIN 4504 & FIN 5515 E...

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Student Name ______________________ FIN 4504 & FIN 5515 Exam II Fall 2009 Guan Jun Wang, Ph.D.
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TRUE/ FALSE ( 3 points each ) 1. The holding period return is an excellent method for computing both a short - term investment and a long - term investment. F 2. The internal rate of return is the discount rate that equates the present value of benefits to the cost of the investment. T 3. Higher risk investments are usually associated with lower expected rates of return. F 4. Business risk is the risk associated with the amount of debt financing used by a firm. F 5. The possibility that interest could affect the rate of return on an investment is referred to as interest rate risk. T 6. Perfectly negatively correlated assets have a correlation coefficient of plus one. F 7. Risk can be totally eliminated by combining two assets that are perfectly positively correlated. F 8. Investing globally offers better diversification than investing only domestically. 9. Beta measures diversifiable risk while standard deviation measures systematic risk. F 10. The CAPM estimates the required rate of return on a stock held as part of a well diversified portfolio. T
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MULTIPLE CHOICES ( 4 points each ) 1. Robin purchased a stock at a price of $18 a share. She received quarterly dividends of $0.50 per share. After one year, Robin sold the stock at a price of $19.50 a share. What is her holding period return on this investment? A) 10.3% B) 11.1% C) 17.9% D) 19.4% D 2. Inflation tends to have a favorable impact on A) Real estate B) Common stock C) Preferred stock D) Bonds A 3. Over the long term, which one of the following has historically had the highest
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This note was uploaded on 05/27/2011 for the course FIN 4504 taught by Professor Wang during the Fall '10 term at Florida A&M.

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EXAM II--sample - Student Name _ FIN 4504 & FIN 5515 E...

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