You own a portfolio that is invested as follows: $11,400 of Stock A, $8,800 of Stock B,
$14,900 of Stock C, and $3,200 of Stock D. What is the portfolio weight of Stock C?
A. 38.47 percent
B. 38.90 percent
C. 39.80 percent
D. 41.94 percent
E. 43.08 percent
Letitia borrowed $6,000 from her bank two years ago. The loan term is four years. Each
year, she must repay the bank $1,500 plus the annual interest. Which type of loan does
she have?
A. Amortized
B. Blended discount
C. Interest-only
D. Pure discount
E. Complex
Which one of the following statements is true concerning annuities?
A. All else equal, an ordinary annuity is more valuable than an annuity due.
B. All else equal, a decrease in the number of payments increases the future value of an
annuity due.
C. An annuity with payments at the beginning of each period is called an ordinary
annuity.
D. All else equal, an increase in the discount rate decreases the present value and
increases the future value of an annuity.
E. All else equal, an increase in the number of annuity payments decreases the present
value and increases the future value of an annuity.
Vegan Delite stock is valued at $124.20 a share. The company pays a constant annual
dividend of $8.80 per share. What is the total return on this stock?
A. 6.62 percent
B. 7.00 percent
C. 7.09 percent
D. 7.49 percent
E. 7.82 percent
A firm expects to increase its annual dividend by 20 percent per year for the next two
years and by 15 percent per year for the following two years. After that, the company
plans to pay a constant annual dividend of $3 a share. The last dividend paid was $1 a
share. What is the current value of this stock if the required rate of return is 12 percent?
A. $17.71
B. $18.97
C. $20.50
D. $21.08
E. $21.69
You own a $46,000 portfolio comprised of four stocks. The values of Stocks A, B, and
C are $5,600, $16,700, and $11,400, respectively. What is the portfolio weight of Stock
D?
A. 24.57 percent
B. 25.39 percent
C. 30.33 percent
D. 32.10 percent
E. 32.58 percent
The operating cash flows of a project:
A. are unaffected by the depreciation method selected.
B. are equal to the projects total projected net income.
C. decrease when net working capital increases.
D. include any aftertax salvage values.
E. include erosion effects.
You just returned from a trip to Venezuela and have 1,650 bolivares fuertes in your
pocket. How many dollars will you receive when you exchange this money if the U.S.
dollar equivalent of the bolivares fuertes is 0.465701?
A. $629.08
B. $768.41
C. $811.40
D. $2,897.18
E. $3,543.05
A bond yielded a real rate of return of 3.87 percent for a time period when the inflation
rate was 3.75 percent. What was the actual nominal rate of return?
A. 87.58 percent
B. 7.62 percent
C. 7.77 percent
D. 8.28 percent
E. .36 percent
Abbott & Costello has the following estimated sales.
Purchases are equal to 75 percent of the following quarters sales. What is the estimated
amount of purchases for quarter 2?
A. $5,209
B. $5,508
C. $5,848
D. $7,125
E. $7,720
If a trade is made “in the crowd,” the trade has occurred:
A. between a broker and a DMM.
B. between two brokers.
C. electronically on NASDAQ.
D. on SuperDOT.
E. on an ECN.
Which one of the following best describes the primary intent of the Sarbanes-Oxley Act
of 2002?
A. Increase the costs of going public
B. Increase protection against corporate fraud
C. Limit secondary issues of corporate securities
D. Decrease the number of publicly traded firms
E. Increase the number of firms that “go dark”
How can a firm benefit from preparing a short-term financial plan?
Explain how a Dutch auction operates and why a firm might choose to sell its securities
in this manner.
Which type of financial market, dealer or auction, is best suited to expanding
internationally and why?
List the various determinants of bond yields and indicate the type of situation that
would cause each determinant to increase the yield on a bond.
Explain the difference between a bid price and an asked price and also explain why the
prices are different.
Using a security market line graph, illustrate a security that is overpriced and has a beta
of 0.89. Label all relevant points, including those that represent the overall market.
Explain why the security plots as you have illustrated it.
Assume the federal government mandates that all retail stores in the northern states
install heated sidewalks to help minimize the number of injuries that occur from people
falling as a result of snow and ice buildup on those sidewalks. How should a firm
determine the cost of capital for a project such as this?
The present value of the benefits of a particular investment happens to equal the initial
cost of that investment at the required rate of 14 percent. What is the value of the
investments internal rate of return, its net present value, and its profitability index?