ACCOUNTING-A company has paid $2 per share in dividends for the past several years

A company has paid $2 per share in dividends for the past several years and plans to continue to do so indefinitely. If an investor’s required return is 13%, what is the most she should pay for a share of this firm’s stock?

A)

$15.38

B)

$20.00

C)

$22.60

D)

$26.13

E)

$65.00

3. A $1,000 par value bond with a 5% coupon that pays interest semiannually and matures in 2 ½ years and has a current price of $977. What is the annualized yield to maturity?

A) 3.0%
	B) 4.0%
	C) 5.0%
	D) 6.0%
	E) 7.0%

Factors that should be considered in taking a stock option position include:

Question 6 options:

	A) The dividend paid on the underlying stock
	B) The volatility of the underlying stock
	C) The time to expiration
	D) The anticipated direction of market movement
	E) All of the above are relevant factors in the option decision

A three-year project costs $50,000 and returns $20,000 the first year, $30,000 the second year, and $25,000 the third year. If the required return is 10.0%, what is the Net Present Value (NPV)?

A three-year project costs $50,000 and returns $20,000 the first year, $30,000 the second year, and $25,000 the third year. If the required return is 10.0%, what is the Net Present Value (NPV)?

Question 7 options:

	A) $11,758
	B) $12,547
	C) $25,000
	D) $61,758
	E) $62,547

A portfolio has a standard deviation of 22%. If the risk-free rate is 3.5%, the expected return on the market portfolio is 12%, and the standard deviation of the market portfolio is 25%, what is the required return on the market portfolio?

Question 9 options:

	A) 7.48%
	B) 10.98%
	C) 12.00%
	D) 13.16%
	E) 14.06%

Rob pays 28% in combined local, state, and federal taxes. If a corporate bond yields 8.3%, what is the after-tax yield?

Question 12 options:

	A) 2.3%
	B) 6.0%
	C) 8.3%
	D) 10.7%
	E) 11.5%

The risk-free rate is currently 2.8%. In one year the price of a given share of stock that currently trades at $40 per share is expected to either increase by 8% or decrease by 2%. What is the current value of a call on this stock with exercise price of $40?

Question 13 options:

	A) $0.00
	B) $1.09
	C) $1.24
	D) $1.49
	E) $1.62

Given the following cash flows with an opportunity cost of 9%, What is the safe rate reinvestment rate IRR for this project? (Net Cash Flow = Cash Outflow + Cash Inflow)

End of Year	Cash OutFlow	Cash Inflow	Net Cash Flow
0	-($10,000)	$0	-($10,000)
1	-($6,000)	$4,000	-($2,000)
2	$0	$5,000	$5,000
3	$0	$8,000	$8,000
4	-($3,000)	$7,000	$4,000

Question 16 options:

	A) 10.6%
	B) 11.1%
	C) 11.6%
	D) 12.1%
	E) 12.6%

Given the following cash flows with an opportunity cost of 9%,What is the borrowing-rate-reinvestment-rate IRR for this project? (Net Cash Flow = Cash Outflow + Cash Inflow)

End of Year	Cash OutFlow	Cash Inflow	Net Cash Flow
0	-($10,000)	$0	-($10,000)
1	-($6,000)	$4,000	-($2,000)
2	$0	$5,000	$5,000
3	$0	$8,000	$8,000
4	-($3,000)	$7,000	$4,000

Question 17 options:

	A) 10.6%
	B) 11.1%
	C) 11.6%
	D) 12.1%
	E) 12.6%

Duration

Question 20 options:

	A) Increases with maturity
	B) Measures the linear relationship between bond prices and bond yields
	C) Is always greater than the maturity
	D) All of the above are true
	E) A and B are true, but C is false

Given the following information concerning Portfolio P and it's benchmark, what is the Sharpe ratio for Portfolio P? Let the risk-free rate be 3.6%

	Portfolio P	Benchmark
Annual Return	12.5%	13.7%
Standard Deviation	15.3%	17.5%
Beta	1.06

Question 21 options:

	A) 0.478
	B) 0.577
	C) 0.582
	D) 0.783
	E) 0.817

Given the following information concerning Portfolio P and it's benchmark, what is the Treynor ratio for Portfolio P? Let the risk-free rate be 3.6%

	Portfolio P	Benchmark
Annual Return	12.5%	13.7%
Standard Deviation	15.3%	17.5%
Beta	1.06

Question 22 options:

	A) 8.40%
	B) 10.20%
	C) 11.79%
	D) 12.92%
	E) 14.43%

Given the following information concerning Portfolio P and it's benchmark, what is the Jensen's alpha for Portfolio P? Let the risk-free rate be 3.6%

	Portfolio P	Benchmark
Annual Return	12.5%	13.7%
Standard Deviation	15.3%	17.5%
Beta	1.06

Question 23 options:

	A) -1.81%
	B) -0.63
	C) 0.00%
	D) +1.58%
	E) +1.79%

What is the correlation with the greatest potential for diversification?

Question 26 options:

	A) -1.0
	B) -0.5
	C) 0.0
	D) +1.0
	E) +2.0

Hedging strategies are

Question 28 options:

	A) designed to limit investment losses.
	B) a form of investment insurance.
	C) transfers risk from one entity to another.
	D) all of these statements are true.
	E) statements A and C are true, but B is not

Variables in the put-call parity include all of the following EXCEPT:

Question 30 options:

	A) Risk-free rate
	B) Time to maturity
	C) Strike price
	D) Price of the underlying asset
	E) Price earnings ratio

A company currently has $3.50 earnings per share of which $1.05 is paid in annual dividends per share. If the growth rate for the firm is 4% per year and the required return is 9%, what is the theoretical P/E ratio?

Question 33 options:

	A) 5.71
	B) 6.00
	C) 6.24
	D) 6.66
	E) 7.00