Finance questions

Question 1

1. Suppose the real rate is 2.52% and the nominal rate is 11.89%. Solve for the inflation rate.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 2

1. Portfolio diversification eliminates which one of the following?

( )		Total investment risk
( )		Portfolio risk premium
( )		Market risk
( )		Unsystematic risk
( )		Reward for bearing risk

1 points

Question 3

1. You own a portfolio of two stocks, A and B. Stock A is valued at $6,540 and has an expected return of 11.2 percent. Stock B has an expected return of 8.1 percent. What is the expected return on the portfolio if the portfolio value is $9,500?

( )		9.58 percent
( )		9.62 percent
( )		9.74 percent
( )		9.97 percent
( )		10.23 percent

1 points

Question 4

1. Standard deviation measures _____ risk while beta measures _____ risk.

( )		systematic; unsystematic
( )		unsystematic; systematic
( )		total; unsystematic
( )		total; systematic
( )		asset-specific; market

1 points

Question 5

1. A $36,000 portfolio is invested in a risk-free security and two stocks. The beta of stock A is 1.29 while the beta of stock B is 0.90. One-half of the portfolio is invested in the risk-free security. How much is invested in stock A if the beta of the portfolio is 0.58?

( )		$6,000
( )		$9,000
( )		$12,000
( )		$15,000
( )		$18,000

1 points

Question 6

1. What is the beta of the following portfolio?
   

( )		1.08
( )		1.14
( )		1.17
( )		1.21
( )		1.23

1 points

Question 7

1. The stock of Billingsley United has a beta of 0.92. The market risk premium is 8.4 percent and the risk-free rate is 3.2 percent. What is the expected return on this stock?

( )		8.87 percent
( )		9.69 percent
( )		10.93 percent
( )		11.52 percent
( )		12.01 percent

1 points

Question 8

1. The systematic risk is same as:

( )		Unique risk
( )		Diversifiable risk
( )		Asset-specific risk
( )		Market risk
( )		Unsystematic risk

1 points

Question 9

1. What is the beta of the following portfolio?
   

( )		0.98
( )		1.02
( )		1.11
( )		1.14
( )		1.20

1 points

Question 10

1. You own a portfolio that has $1,900 invested in Stock A and $2,700 invested in Stock B. If the expected returns on these stocks are 9 percent and 15 percent, respectively, what is the expected return on the portfolio?

( )		10.57 percent
( )		11.14 percent
( )		11.96 percent
( )		12.52 percent
( )		13.07 percent

1 points

Question 11

1. Suppose a stock had an initial price of $66.05 per share, paid a dividend of $8 per share during the year, and had an ending share price of $88.71. What are the percentage returns?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 12

1. A portfolio is invested 41.2% in Stock A, 18.8% in Stock B, and the remainder in Stock C. The expected returns are 18.6%, 33.4%, and 18.9% respectively. What is the portfolio's expected returns?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

1 points

Question 13

1. Suppose a stock had an initial price of $66.63 per share, paid a dividend of $9.1 per share during the year, and had an ending share price of $85.22. What are the percentage returns?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 14

1. You own a portfolio invested 26.47% in Stock A, 18.59% in Stock B, 22.2% in Stock C, and the remainder in Stock D. The beta of these four stocks are 1.35, 1.33, 0.29, and 1.26. What is the portfolio beta?

Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

1 points

Question 15

1. Suppose a stock had an initial price of $69.27 per share, paid a dividend of $4.5 per share during the year, and had an ending share price of $86.98. What are the percentage returns if you own 25 shares?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 16

1. Suppose a stock had an initial price of $85.48 per share, paid a dividend of $6.8 per share during the year, and had an ending share price of $94.87. If you own 48 shares, what are the dollar returns?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 17

1. You have observed the following returns on ABC's stocks over the last five years:

4.4%, 9%, -3.5%, 10.1%, -5.8%

What is the geometric average returns on the stock over this five-year period.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 18

1. Based on the following information, calculate the expected returns:

	Prob	Return
Recession	30%	7.4%
Boom	70%	22.9%

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

1 points

Question 19

1. Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.
Compute the standard deviation of the returns.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 20

1. You own a portfolio invested 27.54% in Stock A, 13.01% in Stock B, 18.13% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.27, 0.89, 0.66, and 0.8. What is the portfolio beta?

Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

1 points

Question 21

1. Suppose a stock had an initial price of $77.23 per share, paid a dividend of $9.9 per share during the year, and had an ending share price of $107.25. What are the dollar returns?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 22

1. Calculate the expected returns of your portfolio

Stock	Invest	Exp Ret
A	$323	6.7%
B	$846	19.5%
C	$1,419	29.3%

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

1 points

Question 23

1. Calculate the expected returns of your portfolio

Stock	Invest	Exp Ret
A	$490	3.1%
B	$960	13%
C	$262	24.6%

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

1 points

Question 24

1. You have observed the following returns on ABC's stocks over the last five years:

3.7%, 8.8%, 4.5%, 11.6%, 3.1%

What is the arithmetic average returns on the stock over this five-year period.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 25

1. You have observed the following returns on ABC's stocks over the last five years:

3.3%, 8.8%, 10.5%, 13.7%, 3.7%

What is the geometric average returns on the stock over this five-year period.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 26

1. You have observed the following returns on ABC's stocks over the last five years:

4.1%, 9%, -14.7%, 11.4%, -2.4%

What is the arithmetic average returns on the stock over this five-year period.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.