MBA 702 EXAM 3 COMPREHENSIVE EXAM QUESTIONS
WITH DETAILED VERIFIED AND 100% ACCURATE
ANSWERS BRAND NEW EXAM ALREADY GRADED (A+
PASS)
LSUS Corporation has 80,000 bonds outstanding that are selling at par
value. Bonds with similar characteristics are yielding 8.6 percent. The
company also has 4 million shares of common stock outstanding. The
stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is
yielding 4 percent and the market risk premium is 8 percent. LSUS
Corporation's tax rate is 34 percent. What is LSUS Corporation's
weighted average cost of capital? Ans✓✓✓11.47%
A year ago, Han purchased 500 shares of LSUS Corporation's stock at a
price of $49.03 per share. The stock pays an annual dividend of $.10 per
share. Today, you sold all of your shares for $58.14 per share. What is
his total dollar return on this investment? Ans✓✓✓$4,605
A stock had returns of 12 percent, 6 percent, 13 percent, -11 percent, and
-2 percent over the past five years. What is the geometric average return
for this time period? Ans✓✓✓3.19%
Assume LSUS Corproation is similar to its industry with one exception,
it has high fixed costs relative to all other firms in that industry. Given
this, you should expect LSUS Corproation Ans✓✓✓a higher beta than
its industry.
The weighted average cost of capital for a firm is the: Ans✓✓✓overall
rate which the firm must earn on its existing assets to maintain its value.
, Which one of these statements related to beta is correct? Ans✓✓✓The
sample size used to compute beta may be too small to yield a reliable
result.
Standard deviation measures _____ risk while beta measures ____ risk.
Ans✓✓✓unsystematic; systematic
The beta of a firm is more likely to be high under which two conditions?
Ans✓✓✓high cyclical business activity and high operating leverage
You have a portfolio comprised of two risky securities. This
combination produces no diversification benefit. The lack of
diversification benefits indicates the returns on the two securities:
Ans✓✓✓move perfectly in sync with one another.
Which one of the following statements concerning the standard
deviation is correct? Ans✓✓✓The higher the standard deviation, the
higher the expected return.
A portfolio consists of Stocks A and B and has an expected return of
11.6 percent. Stock A has an expected return of 17.8 percent while Stock
B is expected to return 8.4 percent. What is the portfolio weight of Stock
A? Ans✓✓✓34.04%
WITH DETAILED VERIFIED AND 100% ACCURATE
ANSWERS BRAND NEW EXAM ALREADY GRADED (A+
PASS)
LSUS Corporation has 80,000 bonds outstanding that are selling at par
value. Bonds with similar characteristics are yielding 8.6 percent. The
company also has 4 million shares of common stock outstanding. The
stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is
yielding 4 percent and the market risk premium is 8 percent. LSUS
Corporation's tax rate is 34 percent. What is LSUS Corporation's
weighted average cost of capital? Ans✓✓✓11.47%
A year ago, Han purchased 500 shares of LSUS Corporation's stock at a
price of $49.03 per share. The stock pays an annual dividend of $.10 per
share. Today, you sold all of your shares for $58.14 per share. What is
his total dollar return on this investment? Ans✓✓✓$4,605
A stock had returns of 12 percent, 6 percent, 13 percent, -11 percent, and
-2 percent over the past five years. What is the geometric average return
for this time period? Ans✓✓✓3.19%
Assume LSUS Corproation is similar to its industry with one exception,
it has high fixed costs relative to all other firms in that industry. Given
this, you should expect LSUS Corproation Ans✓✓✓a higher beta than
its industry.
The weighted average cost of capital for a firm is the: Ans✓✓✓overall
rate which the firm must earn on its existing assets to maintain its value.
, Which one of these statements related to beta is correct? Ans✓✓✓The
sample size used to compute beta may be too small to yield a reliable
result.
Standard deviation measures _____ risk while beta measures ____ risk.
Ans✓✓✓unsystematic; systematic
The beta of a firm is more likely to be high under which two conditions?
Ans✓✓✓high cyclical business activity and high operating leverage
You have a portfolio comprised of two risky securities. This
combination produces no diversification benefit. The lack of
diversification benefits indicates the returns on the two securities:
Ans✓✓✓move perfectly in sync with one another.
Which one of the following statements concerning the standard
deviation is correct? Ans✓✓✓The higher the standard deviation, the
higher the expected return.
A portfolio consists of Stocks A and B and has an expected return of
11.6 percent. Stock A has an expected return of 17.8 percent while Stock
B is expected to return 8.4 percent. What is the portfolio weight of Stock
A? Ans✓✓✓34.04%
