finance 1 exam - Question1 SLO10

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Question 1     SLO 10 O'Brien Inc. has the following data:  rRF = 5.00%; RPM = 6.00%; and b = 1.10.  What is the  firm's cost of equity from retained earnings based on the CAPM? Answer  a . 11.83 % b . 11.60 % c.13.22 % d . 11.25 % e . 8.93% 1 points     Question 2     SLO 10 You were hired as a consultant to Giambono Company, whose target capital structure is 40%  debt, 15% preferred, and 45% common equity.  The after-tax cost of debt is 6.00%, the cost of  preferred is 7.50%, and the cost of retained earnings is 13.00%.  The firm will not be issuing any  new stock.  What is its WACC? Answer 
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a . 9.38% b . 11.44 % c.9.19% d . 10.22 % e . 7.22% 1 points     Question 3     SLO 10 Assume that you are a consultant to Broske Inc., and you have been provided with the following  data:  D1 = $0.67; P0 = $42.50; and g = 8.00% (constant).  What is the cost of equity from  retained earnings based on the DCF approach? Answer  a . 11.68 % b . 11.30 % c.7.95% d . 9.96% e . 9.58%
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1 points     Question 4     SLO8 Taggart Inc.'s stock has a 50% chance of producing a 21% return, a 30% chance of producing a  10% return, and a 20% chance of producing a -28% return.  What is the firm's expected rate of  return? Answer  a . 7.90 % b . 9.72 % c.9.88 % d . 7.82 % e . 8.37 % 1 points     Question 5     SLO8 Cheng Inc. is considering a capital budgeting project that has an expected return of 40% and a  standard deviation of 30%.  What is the project's coefficient of variation? Answer 
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a . 0.7 1 b . 0.9 2 c.0.8 2 d . 0.6 5 e . 0.7 5 1 points     Question 6     SLO8 Bill Dukes has $100,000 invested in a 2-stock portfolio.  $75,000 is invested in Stock X and the  remainder is invested in Stock Y.  X's beta is 1.50 and Y's beta is 0.70.  What is the portfolio's  beta? Answer  a . 1.3 9 b . 1.4 4 c.1.0 0 d . 0.9 8
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e . 1.3 0 1 points     Question 7     SLO8 Jim Angel holds a $200,000 portfolio consisting of the following stocks: Stock Investment Beta A $50,000 0.75 B $50,000 0.80 C $50,000 1.00 D $50,000 1.20 Total $200,000   What is the portfolio's beta? Answer  a . 1.02 2 b . 0.85 3 c.0.95 6 d . 0.93 8
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e . 1.14 4 1 points     Question 8     SLO8 Porter Inc's stock has an expected return of 10.75%, a beta of 1.25, and is in equilibrium.  If the  risk-free rate is 5.00%, what is the market risk premium? Answer  a . 4.32 % b . 4.28 % c.4.55 % d . 5.15
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finance 1 exam - Question1 SLO10

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