Question 1

Interest rates,inflation and economic growth are economic factors that are examples of:

Accepted Answer

A) firm-specific risks that can be diversified away. 
B) market risk. 
C) external factors that are neither firm specific risk nor market risk. 
D) None of these statements is correct. 
A) firm-specific risks that can be diversified away. 
B) market risk. 
C) external factors that are neither firm specific risk nor market risk. 
D) None of these statements is correct. B

Question 2

JoJo's portfolio's return is 12 percent.She is invested in Cisco and IBM which had returns of 15 percent and 9 percent respectively.What percentage of JoJo's assets are invested in each firm?

Accepted Answer

A) 40 percent in Cisco and 60 percent in IBM 
B) 50 percent in Cisco and 50 percent in IBM 
C) 30 percent in Cisco and 70 percent in IBM 
D) Unable to determine with the data provided 
A) 40 percent in Cisco and 60 percent in IBM 
B) 50 percent in Cisco and 50 percent in IBM 
C) 30 percent in Cisco and 70 percent in IBM 
D) Unable to determine with the data provided B

Question 3

Sally wants to invest in only two stocks.Which pair of stocks should Sally select?

Accepted Answer

A) Stocks A and B move downward at the same time. 
B) Stocks C and D move in opposite directions at the same time. 
C) Stocks E and F move upward at the same time. 
D) Stocks G and H move randomly at the same time. 
A) Stocks A and B move downward at the same time. 
B) Stocks C and D move in opposite directions at the same time. 
C) Stocks E and F move upward at the same time. 
D) Stocks G and H move randomly at the same time. B

Question 4

Which of these is defined as a combination of investment assets held by an investor?

Accepted Answer

A) Bundle 
B) Market basket 
C) Portfolio 
D) All of these 
A) Bundle 
B) Market basket 
C) Portfolio 
D) All of these

Question 5

Portfolio Return The following table shows your stock positions at the beginning of the year,the dividends that each stock paid during the year,and the stock prices at the end of the year.What is your portfolio percentage return?

Accepted Answer

A) 3.21 percent 
B) 4.06 percent 
C) 7.26 percent 
D) 8.97 percent 
A) 3.21 percent 
B) 4.06 percent 
C) 7.26 percent 
D) 8.97 percent

Question 6

Standard Deviation Compute the standard deviation of the five monthly returns for PG&E: 1.25 percent,-1.50 percent,4.25 percent,3.75 percent,and 1.98 percent.

Accepted Answer

A) 1.876 percent 
B) 1.946 percent 
C) 2.046 percent 
D) 2.287 percent 
A) 1.876 percent 
B) 1.946 percent 
C) 2.046 percent 
D) 2.287 percent

Question 7

You have $10,000 to invest.You want to purchase shares of Alaska Air at $50.00,Best Buy at $50.00,and Ford Motor at $10.00.How many shares of each company should you purchase so that your portfolio consists of 25 percent Alaska Air,40 percent Best Buy,and 35 percent Ford Motor? Report only whole stock shares.

Accepted Answer

A) 50 shares of Alaska Air, 80 shares of Best Buy, and 300 shares of Ford Motor 
B) 50 shares of Alaska Air, 80 shares of Best Buy, and 350 shares of Ford Motor 
C) 40 shares of Alaska Air, 90 shares of Best Buy, and 300 shares of Ford Motor 
D) 75 shares of Alaska Air, 40 shares of Best Buy, and 350 shares of Ford Motor 
A) 50 shares of Alaska Air, 80 shares of Best Buy, and 300 shares of Ford Motor 
B) 50 shares of Alaska Air, 80 shares of Best Buy, and 350 shares of Ford Motor 
C) 40 shares of Alaska Air, 90 shares of Best Buy, and 300 shares of Ford Motor 
D) 75 shares of Alaska Air, 40 shares of Best Buy, and 350 shares of Ford Motor

Question 8

Which of the following is correct?

Accepted Answer

A) Total risk is measured by the standard deviation. 
B) There is a positive relationship between risk and return. 
C) If you observe a high variability in a stock's returns you can infer that the stock is very risky. 
D) All of these statements are correct. 
A) Total risk is measured by the standard deviation. 
B) There is a positive relationship between risk and return. 
C) If you observe a high variability in a stock's returns you can infer that the stock is very risky. 
D) All of these statements are correct.

Question 9

Portfolio Weights If you own 600 shares of Alaska Corporation at $23.25,450 shares of Best Company at $34.50,and 150 shares of Motor Company at $6.95,what are the portfolio weights of each stock?

Accepted Answer

A) Alaska = 0.6000, Best = 0.4500, Motor = 0.1500 
B) Alaska = 0.3594, Best = 0.5332, Motor = 0.1074 
C) Alaska = 0.4571, Best = 0.5087, Motor = 0.0342 
D) Alaska = 0.2325, Best = 0.3450, Motor = 0.0695 
A) Alaska = 0.6000, Best = 0.4500, Motor = 0.1500 
B) Alaska = 0.3594, Best = 0.5332, Motor = 0.1074 
C) Alaska = 0.4571, Best = 0.5087, Motor = 0.0342 
D) Alaska = 0.2325, Best = 0.3450, Motor = 0.0695

Question 10

Which of the following is correct regarding the total risk of a company?

Accepted Answer

A) A company can change its risk level over time. 
B) Some firms are riskier because they offer many different products and/or services. 
C) Companies can change their risk by reducing the amount of money they have borrowed. 
D) None of these statements is correct. 
A) A company can change its risk level over time. 
B) Some firms are riskier because they offer many different products and/or services. 
C) Companies can change their risk by reducing the amount of money they have borrowed. 
D) None of these statements is correct.

Question 11

Jane Adams invests all her money in the stock of one firm.Which of the following must be true?

Accepted Answer

A) Her return will have more volatility than the return in the overall stock market. 
B) Her return will have less volatility than the return in the overall stock market. 
C) Her return will have the same volatility as the return in the overall stock market. 
D) There is no relationship between her return and the return in the overall stock market. 
A) Her return will have more volatility than the return in the overall stock market. 
B) Her return will have less volatility than the return in the overall stock market. 
C) Her return will have the same volatility as the return in the overall stock market. 
D) There is no relationship between her return and the return in the overall stock market.

Question 12

Investment Return TechNo stock was $25 per share at the end of last year.Since then,it paid a $1.50 per share dividend last year.The stock price is currently $23.If you owned 300 shares of TechNo,what was your percent return?

Accepted Answer

A) -2 percent 
B) -8 percent 
C) 6 percent 
D) 6.5 percent 
A) -2 percent 
B) -8 percent 
C) 6 percent 
D) 6.5 percent

Question 13

Which of the following is the correct ranking from least risky to most risky?

Accepted Answer

A) Long-term Treasury bonds, stocks, Treasury bills 
B) Treasury bills, long-term Treasury bonds, stocks 
C) Stocks, long-term Treasury bond, Treasury bills 
D) Stocks, Treasury bills, long-term Treasury bonds 
A) Long-term Treasury bonds, stocks, Treasury bills 
B) Treasury bills, long-term Treasury bonds, stocks 
C) Stocks, long-term Treasury bond, Treasury bills 
D) Stocks, Treasury bills, long-term Treasury bonds

Question 14

Standard Deviation The standard deviation of the past five monthly returns for K and Company are 2.28 percent,2.64 percent,-1.05 percent,4.25 percent,and 9.25 percent.What is the standard deviation?

Accepted Answer

A) 1.45 percent 
B) 1.62 percent 
C) 3.47 percent 
D) 3.76 percent 
A) 1.45 percent 
B) 1.62 percent 
C) 3.47 percent 
D) 3.76 percent

Question 15

The past five monthly returns for PG&E are 12.14 percent,-11.37 percent,3.77 percent,6.47 percent,and 3.58 percent.What is the average monthly return?

Accepted Answer

A) 2.92 percent 
B) 1.21 percent 
C) -3.46 percent 
D) 3.17 percent 
A) 2.92 percent 
B) 1.21 percent 
C) -3.46 percent 
D) 3.17 percent

Question 16

Consider the characteristics of the following three stocks:
The correlation between Thumb Devices and Air Comfort is -0.12.The correlation between Thumb Devices and Sport Garb is 0.89.The correlation between Air Comfort and Sport Garb is -0.85.If you can pick only two stocks for your portfolio,which would you pick? Why?

Accepted Answer

A) Combine Thumb Devices and Sport Garb because they have a high correlation. 
B) Combine Thumb Devices and Air Comfort because of high standard deviations. 
C) Combine Air Comfort and Sport Garb due to negative correlation. 
D) Combine Thumb Devices and Sport Garb because Thumb Devices has the highest return and Sport Garb has the lowest standard deviation. 
A) Combine Thumb Devices and Sport Garb because they have a high correlation. 
B) Combine Thumb Devices and Air Comfort because of high standard deviations. 
C) Combine Air Comfort and Sport Garb due to negative correlation. 
D) Combine Thumb Devices and Sport Garb because Thumb Devices has the highest return and Sport Garb has the lowest standard deviation.

Question 17

Portfolio Return Year-to-date,Company O had earned a -2.10 percent return.During the same time period,Company V earned 8.00 percent and Company M earned 6.25 percent.If you have a portfolio made up of 40 percent Company O,30 percent Company V,and 30 percent Company M,what is your portfolio return?

Accepted Answer

A) 3.435 percent 
B) 5.115 percent 
C) 12.15 percent 
D) 16.35 percent 
A) 3.435 percent 
B) 5.115 percent 
C) 12.15 percent 
D) 16.35 percent

Question 18

Dominant Portfolios Determine which one of these three portfolios dominates another.Name the dominated portfolio and the portfolio that dominates it.Portfolio Blue has an expected return of 14 percent and risk of 19 percent.The expected return and risk of portfolio Yellow are 15 percent and 18 percent,and for the Purple portfolio are 16 percent and 21 percent.

Accepted Answer

A) Portfolio Blue dominates portfolio Yellow 
B) Portfolio Yellow dominates portfolio Blue 
C) Portfolio Purple dominates portfolio Blue 
D) Portfolio Purple dominates portfolio Yellow 
A) Portfolio Blue dominates portfolio Yellow 
B) Portfolio Yellow dominates portfolio Blue 
C) Portfolio Purple dominates portfolio Blue 
D) Portfolio Purple dominates portfolio Yellow

Question 19

Portfolio Return The following table shows your stock positions at the beginning of the year,the dividends that each stock paid during the year,and the stock prices at the end of the year.What is your portfolio percentage return?

Accepted Answer

A) 3.85 percent 
B) 11.54 percent 
C) 15.38 percent 
D) 17.58 percent 
A) 3.85 percent 
B) 11.54 percent 
C) 15.38 percent 
D) 17.58 percent

Question 20

Average Return The past five monthly returns for PG Company are 3.25 percent,-1.45 percent,4.35 percent,6.49 percent,and 3.75 percent.What is the average monthly return?

Accepted Answer

A) 1.366 percent 
B) 1.608 percent 
C) 3.278 percent 
D) 3.858 percent 
A) 1.366 percent 
B) 1.608 percent 
C) 3.278 percent 
D) 3.858 percent

Interest rates,inflation and economic growth are economic factors that are examples of:

JoJo's portfolio's return is 12 percent.She is invested in Cisco and IBM which had returns of 15 percent and 9 percent respectively.What percentage of JoJo's assets are invested in each firm?

Sally wants to invest in only two stocks.Which pair of stocks should Sally select?

Which of these is defined as a combination of investment assets held by an investor?

Portfolio Return The following table shows your stock positions at the beginning of the year,the dividends that each stock paid during the year,and the stock prices at the end of the year.What is your portfolio percentage return?

Standard Deviation Compute the standard deviation of the five monthly returns for PG&E: 1.25 percent,-1.50 percent,4.25 percent,3.75 percent,and 1.98 percent.

Which of the following is correct?

Portfolio Weights If you own 600 shares of Alaska Corporation at $23.25,450 shares of Best Company at $34.50,and 150 shares of Motor Company at $6.95,what are the portfolio weights of each stock?

Which of the following is correct regarding the total risk of a company?

Jane Adams invests all her money in the stock of one firm.Which of the following must be true?

Investment Return TechNo stock was $25 per share at the end of last year.Since then,it paid a $1.50 per share dividend last year.The stock price is currently $23.If you owned 300 shares of TechNo,what was your percent return?

Which of the following is the correct ranking from least risky to most risky?

Standard Deviation The standard deviation of the past five monthly returns for K and Company are 2.28 percent,2.64 percent,-1.05 percent,4.25 percent,and 9.25 percent.What is the standard deviation?

The past five monthly returns for PG&E are 12.14 percent,-11.37 percent,3.77 percent,6.47 percent,and 3.58 percent.What is the average monthly return?

Portfolio Return Year-to-date,Company O had earned a -2.10 percent return.During the same time period,Company V earned 8.00 percent and Company M earned 6.25 percent.If you have a portfolio made up of 40 percent Company O,30 percent Company V,and 30 percent Company M,what is your portfolio return?

Portfolio Return The following table shows your stock positions at the beginning of the year,the dividends that each stock paid during the year,and the stock prices at the end of the year.What is your portfolio percentage return?

Average Return The past five monthly returns for PG Company are 3.25 percent,-1.45 percent,4.35 percent,6.49 percent,and 3.75 percent.What is the average monthly return?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 9: Characterizing Risk and Return

Interest rates,inflation and economic growth are economic factors that are examples of:

JoJo's portfolio's return is 12 percent.She is invested in Cisco and IBM which had returns of 15 percent and 9 percent respectively.What percentage of JoJo's assets are invested in each firm?

Sally wants to invest in only two stocks.Which pair of stocks should Sally select?

Which of these is defined as a combination of investment assets held by an investor?

Portfolio Return The following table shows your stock positions at the beginning of the year,the dividends that each stock paid during the year,and the stock prices at the end of the year.What is your portfolio percentage return?

Standard Deviation Compute the standard deviation of the five monthly returns for PG&E: 1.25 percent,-1.50 percent,4.25 percent,3.75 percent,and 1.98 percent.

Which of the following is correct?

Portfolio Weights If you own 600 shares of Alaska Corporation at $23.25,450 shares of Best Company at $34.50,and 150 shares of Motor Company at $6.95,what are the portfolio weights of each stock?

Which of the following is correct regarding the total risk of a company?

Jane Adams invests all her money in the stock of one firm.Which of the following must be true?

Investment Return TechNo stock was $25 per share at the end of last year.Since then,it paid a $1.50 per share dividend last year.The stock price is currently $23.If you owned 300 shares of TechNo,what was your percent return?

Which of the following is the correct ranking from least risky to most risky?

Standard Deviation The standard deviation of the past five monthly returns for K and Company are 2.28 percent,2.64 percent,-1.05 percent,4.25 percent,and 9.25 percent.What is the standard deviation?

The past five monthly returns for PG&E are 12.14 percent,-11.37 percent,3.77 percent,6.47 percent,and 3.58 percent.What is the average monthly return?

Portfolio Return Year-to-date,Company O had earned a -2.10 percent return.During the same time period,Company V earned 8.00 percent and Company M earned 6.25 percent.If you have a portfolio made up of 40 percent Company O,30 percent Company V,and 30 percent Company M,what is your portfolio return?

Portfolio Return The following table shows your stock positions at the beginning of the year,the dividends that each stock paid during the year,and the stock prices at the end of the year.What is your portfolio percentage return?

Average Return The past five monthly returns for PG Company are 3.25 percent,-1.45 percent,4.35 percent,6.49 percent,and 3.75 percent.What is the average monthly return?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters