Sample Final Exam with Answers - 1 At 10:59 A.M the price...

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Sample Final Exam with Answers

View Test Prep - Sample Final Exam with Answers from FIN 300 at Ryerson University.

1 .   At 10:59 A.M. , the price of Nexus Corp. stock is $ 25 on the stock exchange . At 11:00 , Nexus management unexpectedly announces that the firm has just struck oil in Northern Timbuktu ( a good thing ) . There are no other relevant announcements during the day . At 11:01 , Nexus stock is selling for $ 28.10 . At 12:01 , the stock is selling for $ 28.00 on the stock exchange . At 4:00 at the close of trading , Nexus stock is still selling for $ 28.05 . Which of the following statements is most consistent with the above information ?
a ) The market is weak form efficient
b ) The market is not weak form efficient
c ) 
d ) The market is not semi - strong form efficient
e ) The market is strong form efficient
Answer:  c )   The market is semi-strong form efficient
2 .   You have just gotten a mortgage for $ 150,000 . The interest rate on the mortgage is 6 % per year , compounded semi-annually . If the amortization period is 25 years , and you are going to make weekly payments what will be the size of each payment ?
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3 .   In a truly competitive environment in which everyone has the same capabilities , where there are no barriers to entry , where there are no patent or copyright laws , and where everyone has equal access to funding , investments …
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4 .   You have been asked to calculate the required rate of return on ABC ’s common stock . The stock just paid a dividend of $ 2 . The dividend is expected to increase by 6 % per year in perpetuity . The stock ’s current price is $ 10 per share .
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5 .   Given no change in required returns , the value of a share of stock whose dividend is constant will :
a ) increase over time at a rate of r percent
b ) decrease over time at a rate of r percent
c ) increase over time at a rate equal to the dividend growth rate
d ) decrease over time at a rate equal to the dividend growth rate
e ) 
Answer:  e )   remain unchanged
6 .   A bond is issued on January 1 st , 1994 . It is a 20 - year 5 % annual coupon bond with a $ 1000 face value . If the price of the bond at issue is greater than $ 1000 ,
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7 .   Sunk costs
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8 .   Risk adverse investors prefer risk for a given level of expected return and expected return for a given level of risk .
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9 .   You have been asked to determine the cash flow from the assets for ABC Inc. ABC had net income of $ 100 . Its interest expense was $ 20 . The company ’s tax rate was 40 % . ABC ’s capital spending and depreciation was $ 10 . The company ’s net working capital for the year did not change .
a ) $ 60.00
b ) $ 166.67
c ) 
d ) $ 170.00
e ) none of the above
Answer:  c )   $ 120.00
10 .   Assume the anticipated growth rate in dividends is constant for Fly - By - Nite Airlines . The expected value of the firm 's stock at the end of four years ( P4 ) is I. D5 / ( r – g ) II . P0 * ( 1 + g) 4 III . D0 * ( 1 + g ) / ( r – g)
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11 .   The risk free rate in the economy is 7 % . Stock A has an expected return of 13.5 % and a beta of 1.2 . Stock B has an expected return of 10.5 % and a beta of 0.8 . Suppose that we know that stock A is fairly priced and the betas of stocks A and B are accurate . Which of the following regarding stock B is correct ?
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12 .   You wish to have $ 200,000 in 20 year ’s time . The bank has offered to set up a special account that pays 16 % per year , compounded quarterly . How much money do you need to put into the account today to have $ 200,000 in 20 years ?
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Business Analytics: Data Analysis & Decision Making
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Chapter 16 / Exercise 50
Business Analytics: Data Analysis & Decision Making
Albright/Winston
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1.At 10:59 A.M., the price of Nexus Corp. stock is $25 on the stock exchange. At 11:00, Nexus management unexpectedly announces that the firm has just struck oil in Northern Timbuktu (a good thing). There are no other relevant announcements during the day. At 11:01, Nexus stock is selling for $28.10. At 12:01, the stock is selling for $28.00 on the stock exchange. At 4:00 at the close of trading, Nexus stock is still selling for $28.05. Which of the following statements is most consistent with the above information?a)The market is weak form efficientb)The market is not weak form efficientc)The market is semi-strong form efficientd)The market is not semi- strong form efficiente)The market is strong form efficient
2.You have just gotten a mortgage for $150,000. The interest rate on the mortgage is 6% per year, compounded semi-annually. If the amortization period is 25 years, and you are going to make weekly payments what will be the size of each payment?
3.In a truly competitive environment in which everyone has the same capabilities, where there are no barriers to entry, where there are no patent or copyright laws, and where everyone has equal access to funding, investments…
4.You have been asked to calculate the required rate of return on ABC’s common stock. The stock just paid a dividend of $2. The dividend is expected to increase by 6% per year in perpetuity. The stock’s current price is $10 per share.
5.Given no change in required returns, the value of a share of stock whose dividend is constant will:a)increase over time at a rate of r percent b)decrease over time at a rate of r percent c)increase over time at a rate equal to the dividend growth rate d)decrease over time at a rate equal to the dividend growth rate e)remain unchanged
6.A bond is issued on January 1st, 1994. It is a 20-year 5% annual coupon bond with a $1000 face value. If the price of the bond at issue is greater than $1000,
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Business Analytics: Data Analysis & Decision Making
The document you are viewing contains questions related to this textbook.
Chapter 16 / Exercise 50
Business Analytics: Data Analysis & Decision Making
Albright/Winston
Expert Verified

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