UC Final 2012 - Investment Class UC Extension Final Exam...

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Investment Class UC Extension Final Exam Name Mehmet Emin Ciftci The exam consists of two parts: Part I Short Answer Questions / Multiple Choices) and Part II (essay questions / mini-cases questions). Please turn in the project together with the exam . Please work independently. Answer all questions on this take-home exam on your own. For Mini-case / essay questions, please show your calculations / work procedures for full or partial credits. Sample Question & Answer: Question : Company A’s expected dividend (D 1 ) is $3. The dividend growth rate is 4%. The stock is currently sells for $34. The new stock (external equity) can be sold to net the firm $32 per share. What’s the firm’s cost of new common stock, K e ? Solution : % 38 . 13 100 04 . 0 32 3 0 1 1 0 = + = + = - = g P D k g k D P e e Please refer to the mid-term Self Evaluation Exam (answer keys) for the materials covered in the first half of the course. Total points: 120 (50 for the multiple choice & short answer questions; 70 for the mini- case / essay questions). Included in 120 total points are bonus questions with 20 points. Delivery : Please email your answer keys (as MS-Word or PDF file) to [email protected] with copy yourself. I will reply with a brief note acknowledging the receipts of your deliverables. Please include your full name as a part of the document. Thank you again for your interests and for your great work for the past nine weeks. I enjoy reading your weekly discussion forums (online) and hear other feedbacks from you via the email communications. Please feel free to contact me for other assistances including career advices, reference & recommendation letters, investment tips. Peter Lou, CFA 1
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PART I: MULTIPLE CHOICE / SHORT ANSWER QUESTIONS (50 points) 1. According to the efficient market hypothesis, there should be __________ overpriced and __________ underpriced securities. A) no, no B) no, some C) some, no D) some, some 2. Which of the following statements is most correct?
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