BFIN 300 Final Test Questions and Answers All Correct

BFIN 300 Final Test Questions and Answers All Correct A symmetric, bell-shaped frequency distribution that is completely defined by its mean and standard deviation is the: - Answer-normal distribution The excess return required from a risky asset over that required from a risk-free asset is called the: - Answer-risk premium The risk premium is computed by: - Answer-subtracting the average return on the US treasury bill from the average return for the investment The relationship between nominal rates, real rates, and inflation is known as the - Answer-Fisher effect The percentage of a portfolio's total value invested in a particular asset is called the: - Answer-portfolio weight. The stated interest payment in dollars made on a bond each period is called the bond's - Answer-coupon All else constant, a bond will sell at ____ when the YTM is ___ the coupon rate. - Answer-a discount, higher than Assume you are using the dividend growth model to value stocks. If you expect the market rate of return to increase across the board on all equity securities, then you should also expect the: - Answer-market values of all stocks to decrease, all else constant The rate of return required by investors in the market for owning a bond is called the - Answer-yield to maturity Tucci Designs stock has a beta of .89 and a risk free rate of 2.15%, and the expected return on the market is 11%. The expected return for the stock is closest to... - Answer-10.0265% Several years ago you purchased Techheads Tech bonds. A recent price quote on the bonds is 97.65. The bonds have 4 years left to maturity and a coupon rate of 2.75%. The semi-annual yield to maturity is closest to - Answer-1.69% Green valley holdings has an expected return of 8.56%. The risk free rate is 1.80% and the market risk premium is 8.45%. Green Valley's beta is closest to: - Answer-.84 Suppose you own a risky asset with an expected return of 12% and a standard deviation of 20%. If the returns are normally distributed, the approximate probability of receiving a return greater than 32% is about: - Answer-16% BurgerTyme food services has a beta of 1.43 and an expected return of 14.65%. the risk free rate is 3.40%. The return on the market is closest to: - Answer-11.25% RedGiant Inc. just issued zero coupon bonds due in 7 years. The bonds were issued at a yield to maturity of 4.25%. The price received by RedGiant is closest to: - Answer-$74.50 If the expected return on the market is 16% then using the historical risk premium on stock of 8.6%, the current risk-free rate is - Answer-7.4% Magnus Inc.'s price is $35 a share, their dividend for next year is expected to be $1.90, and the long term sustainable growth rate is 3.5%. The expected reutrn on the stock is closest to: - Answer-8.93% The expected return of the portfolio when there is a 60% chance for the Boom scenario and a 40% chance for the bust scenario and the portfolio is invested 70% in stock G and 30% in stock H is closest to: - Answer-6.20% You paid 42.86 a share for Promethesus Holdings a year ago. You've received total dividends of $1.50 and the stock returned 13% for the prior year. The stock's current value is closest to: - Answer-$47.09 An underlying assumption of the dividend growth model is that a stock is worth: - Answer-the present value of the future income which it generates The value of common stock today depends on: - Answer-the expected future dividends, capital gains, and discount rate.