sample_test2

sample_test2 - Exam Number: _ FIN 3710 Investment Analysis...

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Exam Number: ____________________ FIN 3710 Zicklin School of Business Investment Analysis Baruch College Prof: Lin Peng FIN 3710 Sample Midterm 2 NAME: ______________________________ (Please print your name here) PLEDGE: ____________________________ (Sign your name here) Instructions: 1. First find your assigned seat and sign on the seat assignment sheet. Then you can receive your exam. 2. Print and sign your name on the exam. 3. The exam is closed book and closed notes. You can bring in one page, 8 11 handwritten formula sheet. You have a total of 75 minutes for the exam. 4. The exam has a total of 20 points. There are 25 multiple choices questions, 0.8 point for each question. 5. Do not separate the exam book. Feel free to use the back of the exam book for as your scratch sheet. 6. Budgeting your time efficiently.
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Important: Please fill in your answers in the table below with a Pen. Any grade discrepancies will not be considered if you use a pencil. 1 2 3 4 5 C D B B D 6 7 8 9 10 B A B B D 11 12 13 14 15 A D B C D 16 17 18 19 20 D D A A A 21 22 23 24 25 B B B A A 1. The constant growth dividend discount model (DDM) is valid only when ____________. A. growth rate is less than or equal to the required return B. growth rate is greater than or equal to the required return C. growth rate is less than the required return D. growth rate is greater than the required return 2. Computer stocks currently provide an expected rate of return of 16%. The forecasted dividend for IBM one year from now is $2 per share. If the stock is selling at $50 per share, what must be the market’s expectation of the growth rate of IBM’s dividends? (HW3) A) 10% B) 15% C) 16% D) none of the above 3. If dividend growth forecasts for IBM are revised downward to 5% per year, what will happen to the price of IBM stock? (HW3) A) stay unchanged B) fall to $18.18 C) increase to $60 D) none of the above ******* 4. Even better products has come out with a new and improved product. As a result, the firm projects an ROE of 20%, and it will maintain a plowback ratio of 0.30.
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Its earnings this year will be $2 per share. Investors expect a 12% return on the stock. What’s the present value of the growth opportunities? (HW3)
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This note was uploaded on 08/26/2011 for the course ECO 220 taught by Professor Huang during the Spring '08 term at CUNY Hunter.

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sample_test2 - Exam Number: _ FIN 3710 Investment Analysis...

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