FIN310 FINAL EXAM iCLICKER AND SLIDE (Frank
Smith final **** 1-16 = Exam 1 Questions 17-30 = Exam 2
Questions 31-39 = Exam 3 Questions 40-58 = NEW INFO)
QUESTIONS WITH COMPLETE SOLUTIONS
_____ mortgages enabled more people with relatively lower
income , or high existing debt, or a small down payment for
purchase homes.
a. Prime
b. Balloon
c. Amortized
d. Subprime correct answers d. Subprime
A call option is "out of the money" when the
a. market price of the security exceeds the exercise price
b. market price of the security equals the exercise price
c. market price of the security less than the exercise price
d. premium on the option is less than the exercise price correct
answers c. market price of the security less than the exercise
price
A firm has a current stock price of $11.32. The firm's annual
dividend is $1.14 per share. The firm's dividend yield is:
a. Less than 5%
b. Between 5% and 8%
c. Between 8.01% and 11%
d. Greater than 11% correct answers c. Between 8.01% and
11%
,A firm is expected to generate earnings of $3.22 per share next
year. The mean ratio of share price to expected earnings of
competitors in the same industry is 15. Based on this
information, the valuation of the firm's shares based on the
price-earnings (PE) method is:
a. Less than $30
b. Between $30 and $37
c. Between $37.01 and $45
d. Greater than $45 correct answers d. Greater than $45
3.22 * 15
A loose-money policy tends to ____ economic growth and
______ the inflation rate.
a. Stimulate; place downward pressure on
b. Stimulate; place upward pressure on
c. Dampen; place upward pressure on
d. Dampen; place downward pressure on correct answers b.
Stimulate; place upward pressure on
A put option is "in the money" when the
a. market price of the security exceeds the exercise price
b. market price of the security equals the exercise price
c. market price of the security less than the exercise price
d. premium on the option is less than the exercise price correct
answers c. market price of the security less than the exercise
price
, A repurchase agreement calls for an investor to buy securities
for $4,825,000 and sell these back in 60 days for $5,000,000.
What is the yield?
a. Less than 6%
b. Between 6% and 8%
c. Between 8.015% and 10.5%
d. None of the above correct answers d. None of the above
A speculative buys a call option for $5, with an exercise price of
$50. The stock is currently priced at $49, and rises to $55 on the
expiration date. What is the stock price at which the speculator
would break even?
a. Less than $48
b. Between $48 and $52
c. Between $52.01 and $55
d. Between $55.01 and $59
e. Greater than $9 correct answers c. Between $52.01 and $55
A stock's average return is 11%. The average risk-free rate is
9%. The stock's beta is 1 and its standard deviation of returns is
10%. What is the Sharpe Index?
a. .05
b. .5
c. .1
d. .02
e. .2 correct answers e. .2
11-9/10
Smith final **** 1-16 = Exam 1 Questions 17-30 = Exam 2
Questions 31-39 = Exam 3 Questions 40-58 = NEW INFO)
QUESTIONS WITH COMPLETE SOLUTIONS
_____ mortgages enabled more people with relatively lower
income , or high existing debt, or a small down payment for
purchase homes.
a. Prime
b. Balloon
c. Amortized
d. Subprime correct answers d. Subprime
A call option is "out of the money" when the
a. market price of the security exceeds the exercise price
b. market price of the security equals the exercise price
c. market price of the security less than the exercise price
d. premium on the option is less than the exercise price correct
answers c. market price of the security less than the exercise
price
A firm has a current stock price of $11.32. The firm's annual
dividend is $1.14 per share. The firm's dividend yield is:
a. Less than 5%
b. Between 5% and 8%
c. Between 8.01% and 11%
d. Greater than 11% correct answers c. Between 8.01% and
11%
,A firm is expected to generate earnings of $3.22 per share next
year. The mean ratio of share price to expected earnings of
competitors in the same industry is 15. Based on this
information, the valuation of the firm's shares based on the
price-earnings (PE) method is:
a. Less than $30
b. Between $30 and $37
c. Between $37.01 and $45
d. Greater than $45 correct answers d. Greater than $45
3.22 * 15
A loose-money policy tends to ____ economic growth and
______ the inflation rate.
a. Stimulate; place downward pressure on
b. Stimulate; place upward pressure on
c. Dampen; place upward pressure on
d. Dampen; place downward pressure on correct answers b.
Stimulate; place upward pressure on
A put option is "in the money" when the
a. market price of the security exceeds the exercise price
b. market price of the security equals the exercise price
c. market price of the security less than the exercise price
d. premium on the option is less than the exercise price correct
answers c. market price of the security less than the exercise
price
, A repurchase agreement calls for an investor to buy securities
for $4,825,000 and sell these back in 60 days for $5,000,000.
What is the yield?
a. Less than 6%
b. Between 6% and 8%
c. Between 8.015% and 10.5%
d. None of the above correct answers d. None of the above
A speculative buys a call option for $5, with an exercise price of
$50. The stock is currently priced at $49, and rises to $55 on the
expiration date. What is the stock price at which the speculator
would break even?
a. Less than $48
b. Between $48 and $52
c. Between $52.01 and $55
d. Between $55.01 and $59
e. Greater than $9 correct answers c. Between $52.01 and $55
A stock's average return is 11%. The average risk-free rate is
9%. The stock's beta is 1 and its standard deviation of returns is
10%. What is the Sharpe Index?
a. .05
b. .5
c. .1
d. .02
e. .2 correct answers e. .2
11-9/10
