sample-final-819

Sample-final-819 - Final Fin-819 Last name First name Instruction For the multiple choice questions(2 point each you write your answers on

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Final : Fin-819 Last name______________ First name__________________ Instruction. For the multiple choice questions (2 point each), you write your answers on scantrons. For the last three questions, write your answers on the exam. Please write your name on both scantrons and exams legibly and clearly. 1. Businesses can be organized as A) sole proprietorships B) partnerships C) corporations D) any of the above E) none of the above Answer D) 2. Limited liability is an important feature of: A) Sole proprietorships B) Partnerships C) Corporations D) All of the above E) None of the above Answer: C 3.Current price of Company X's stock is $100. The table below gives the data on end of the year prices and probabilities dependent on the state of the economy. Calculate the standard deviation for the rate of return for the stock (no dividends). E c o n o m y P r o b a b i l i t y E n d o f t h e y e a r p r i c e G r o w t h . 5 $ 1 3 0 R e c e s s i o n . 5 $ 9 0 A) 12.5% B) 15.5% C) 14.3% D) 10.0% E) None of the above Answer: E) 4. Mr. John has $100 income this year and zero income next year. The market interest rate is 10% per year. Mr. John also has an investment opportunity in which he can invest $50 this year and receive $70 next year. Suppose Mr. John consumes $30 this year and invests in the project. What is the NPV of the investment opportunity? A) $5 B) $13.64
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C) $0 (zero) D) $ 33.64 E) None of the above. Answer: B Response: NPV = (70/1.1) -50 = 13.64 5.Which of the following statements regarding the net present value rule and the internal rate of return rule is always true? A) Accept a project if the internal rate of return is positive B) Accept a project if the internal rate of return on a risky project exceeds the cost of capital for the project C) Accept a project if the net present value is positive D) B and C E) none of the above Answer: C 6.Which of the following is true about discounting future risk-free cash flows in the NPV rule: A) A dollar today is worth more than a dollar tomorrow (for positive risk-free interest rates) B) The value of a dollar is increasing all the time C) A risky dollar is worth more than a safe one D) A and B above E) None of the above Answer: A 7. Which of the following statements is true? A) Present value of an annuity due is always large than the present value of an equivalent annuity for a given positive interest rate ( an annuity due means immediate cash flows now) B) The present value of an annuity approaches the present value of a perpetuity as n goes to infinity for a given interest rate C) Both A and B are true D) Both A and B are false E) None of the above Answer: C 8. Which of the following statements is true about real and nominal interest rates? A) Nominal interest rates are always larger than real interest rates B) Real interest rates can be negative C) Nominal interest rates cannot be negative D) Both B and C E) None of the above
Background image of page 2
Answer: D 9. Y2K Technology Corporation has just paid a dividend of $0.40 per share. The dividends are expected to grow at 30% per year for the next two years and at 5% per year thereafter. If the
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/05/2011 for the course FIN 819 taught by Professor Staff during the Spring '11 term at S.F. State.

Page1 / 14

Sample-final-819 - Final Fin-819 Last name First name Instruction For the multiple choice questions(2 point each you write your answers on

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online