FINANCE 301 Final Exam Rated A+| Questions Solved 100% Correct | Verified Answers

FINANCE 301 Final Exam Rated A+| Questions
Solved 100% Correct | Verified Answers
Calculate the alpha of an investment that returned 10% if the market return is 10%, the
risk free rate is 2%, and the investment's Beta is 1.1?
A) 0.0%
B) 0.8%
C) 8.8%
D) -0.8%
E) -1.2% - ANSWER B) 0.8%


Which of the following forms of efficient markets is characterized by stock prices
reflecting all publically available information?
A) Weak Form
B) Semi-strong Form
C) Strong Form
D) Random Form
E) Independent Form - ANSWER B) Semi-strong Form


Which of the following analysts do not agree with weak form market efficiency?
A) Fundamental analysts
B) Investment bankers
C) Mutual fund managers
D) Technical analysts
E) Hedge fund analysts - ANSWER D) Technical analysts


In the CAPM equation, what does a beta measure?

, A) Risk that you are not paid to take
B) Risk that you are paid to take
C) Firm specific risk
D) Riskless rate of return
E) Market risk premium - ANSWER B) Risk that you are paid to take


Which of the following types of risk can be diversified away?
A) Market risk
B) Systematic risk
C) Unsystematic risk
D) Market premium risk
E) Systemic risk - ANSWER C) Unsystematic risk


Which of the following is NOT one of the types of risk associated with fixed-rate debt
obligations?
A) Reinvestment risk
B) Default risk
C) Prepayment risk
D) Coupon risk
E) Interest risk - ANSWER D) Coupon risk


Which of the following types of risk is most difficult to evaluate?
A) Reinvestment risk
B) Interest rate risk
C) Prepayment risk
D) Coupon risk