## Exam (elaborations)

# FIN 5130 QUIZ 3 2020 with all the correct answers

QUIZ 3 • Question 1 1 out of 1 points You have observed the following returns on ABC's stocks over the last five years: 4.1%, 9%, -7%, 11%, -6.7% 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. • Question 2 1 out of 1 points Suppose a stock had an initial price of $89.77 per share, paid a dividend of $9.3 per share during the year, and had an ending share price of $80.25. 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. • Question 3 1 out of 1 points You own a portfolio invested 22.72% in Stock A, 16.67% in Stock B, 28.63% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.65, 0.19, 0.73, and 1.39. 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. • Question 4 1 out of 1 points Suppose a stock had an initial price of $51.82 per share, paid a dividend of $5 per share during the year, and had an ending share price of $87.91. 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. • Question 5 1 out of 1 points Suppose a stock had an initial price of $74.37 per share, paid a dividend of $5.2 per share during the year, and had an ending share price of $83.55. 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. • Question 6 1 out of 1 points 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. • Question 7 1 out of 1 points 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. • Question 8 1 out of 1 points You own a portfolio invested 18.16% in Stock A, 19.3% in Stock B, 25.73% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.52, 0.52, 0.28, and 0.95. 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. • Question 9 1 out of 1 points Suppose a stock had an initial price of $78.1 per share, paid a dividend of $9.1 per share during the year, and had an ending share price of $92.31. If you own 200 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. • Question 10 1 out of 1 points Calculate the expected returns of your portfolio Stock Invest Exp Ret A $332 6.4% B $913 19.8% C $1,612 21.6% 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. • Question 11 1 out of 1 points Calculate the expected returns of your portfolio Stock Invest Exp Ret A $137 2.4% B $942 17.6% C $313 22.7% 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. • Question 12 1 out of 1 points A portfolio is invested 23.1% in Stock A, 20.1% in Stock B, and the remainder in Stock C. The expected returns are 15.3%, 24%, and 21.7% 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. • Question 13 1 out of 1 points Suppose a stock had an initial price of $68.64 per share, paid a dividend of $8.2 per share during the year, and had an ending share price of $88.89. 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. • Question 14 1 out of 1 points Semi-strong-form efficient markets are not weak-form efficient. • Question 15 1 out of 1 points If markets are efficient, the difference between the instrinsic value and the market value of the comapny's security is: • Question 16 0 out of 1 points Suppose the real rate is 2.25% and the nominal rate is 11.16%. Solve for the inflation rate. Use the Fisher Effect equation. 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. • Question 17 1 out of 1 points The systematic risk is same as: • Question 18 1 out of 1 points 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? • Question 19 1 out of 1 points 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? • Question 20 1 out of 1 points 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? • Question 21 1 out of 1 points What is the beta of the following portfolio? • Question 22 1 out of 1 points Standard deviation measures _____ risk while beta measures _____ risk. • Question 23 1 out of 1 points What is the beta of the following portfolio? • Question 24 1 out of 1 points 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? • Question 25 1 out of 1 points Portfolio diversification eliminates which one of the following? Choose only one option.