FIN 202 Full Questions With Complete Solutions
QN=402 (20666) Genaro needs to capture a return of 40 percent
for his one-year investment in a property. He believes that he
can sell the property at the end of the year for $150,000 and that
the property will provide him with rental income of $25,000.
What is the maximum amount that Genaro should be willing to
pay for the property?
a. $112,500
b. $125,000
c. $137,500
d. $150,000 Correct Answers B
QN=403 (20676) Braniff Ground Services stock has an expected
return of 9 percent and a variance of 0.25 percent. What is the
coefficient of variation for Braniff?
a. 0.0278
b. 0.5556
c. 1.800
d. 36.00 Correct Answers B
QN=404 (20657) The expected return for Stock Z is 30 percent.
If we know the following information about Stock Z, then what
return will it produce in the Lukewarm state of the world?
Return Probability
Poor 0.2 0.25
Lukewarm ? 0.5
Dynamite! 0.4 0.25
a. 20%
b. 30%
,c. 40%
d. It is impossible to determine. Correct Answers B
QN=405 (20665) Babs purchased a piece of real estate last year
for $85,000. The real estate is now worth $102,000. If Babs
needs to have a total return of 25 percent during the year, then
what is the dollar amount of income that she needed to have to
reach her objective?
a. $3,750
b. $4,250
c. $4,750
d. $5,250 Correct Answers B
QN=406 (20693) The expected return on Kiwi Computers stock
is 16.6 percent. If the risk-free rate is 4 percent and the expected
return on the market is 10 percent, then what is Kiwi's beta?
a. 1.26
b. 2.10
c. 2.80
d. 3.15 Correct Answers B
QN=407 (20654) The expected return for the asset below is
18.75 percent. If the return distribution for the asset is described
as in the following table, what is the variance for the asset's
returns?
Return Probability
0.1 0.25
0.2 0.5
0.25 0.25
,a. 0.002969
b. 0.000613
c. 0.015195
d. 0.054486 Correct Answers A
QN=408 (20669) You have observed that the average size of a
particular goldfish is 1.5 inches long. The standard deviation of
the size of the goldfish is 0.25 inches. What is the size of a
goldfish such that 95 percent of the goldfish are smaller?
Assume a normal distribution for the size of goldfish.
a. 1.01 inches
b. 1.09 inches
c. 1.91 inches
d. 1.99 inches Correct Answers C
QN=409 (20685) The covariance of the returns between Einstein
Stock and Bohr Stock is 0.0087. The standard deviation of
Einstein is 0.26, and the standard deviation of Bohr is 0.37.
What is the correlation coefficient between the returns of the
two stocks?
a. 0.090437
b. 0.096200
c. 0.90437
d. 0.96200 Correct Answers A
QN=410 (20660) Julio purchased a stock one year ago for $27.
The stock is now worth $32, and the total return to Julio for
owning the stock was 37 percent. What is the dollar amount of
dividends that he received for owning the stock during the year?
a. $4
b. $5
, c. $6
d. $7 Correct Answers B
QN=411 (20681) Given the returns for two stocks with the
following information, calculate the covariance of the returns for
the two stocks. Assume the expected return is 10.8 percent for
Stock 1 and 9.7 percent for Stock 2.
Prob Stock 1 Stock 2
0.4 0.09 0.11
0.5 0.11 0.08
0.1 0.17 0.13
a. 0.000094
b. 0.00051600
c. 0.00032100
d. 0.71750786 Correct Answers A
QN=412 (20678) You have invested 40 percent of your portfolio
in an investment with an expected return of 12 percent and 60
percent of your portfolio in an investment with an expected
return of 20 percent. What is the expected return of your
portfolio?
a. 15.2%
b. 16.0%
c. 16.8%
d. 17.6% Correct Answers C
QN=413 (20683) Given the returns for two stocks with the
following information, calculate the covariance of the returns for
QN=402 (20666) Genaro needs to capture a return of 40 percent
for his one-year investment in a property. He believes that he
can sell the property at the end of the year for $150,000 and that
the property will provide him with rental income of $25,000.
What is the maximum amount that Genaro should be willing to
pay for the property?
a. $112,500
b. $125,000
c. $137,500
d. $150,000 Correct Answers B
QN=403 (20676) Braniff Ground Services stock has an expected
return of 9 percent and a variance of 0.25 percent. What is the
coefficient of variation for Braniff?
a. 0.0278
b. 0.5556
c. 1.800
d. 36.00 Correct Answers B
QN=404 (20657) The expected return for Stock Z is 30 percent.
If we know the following information about Stock Z, then what
return will it produce in the Lukewarm state of the world?
Return Probability
Poor 0.2 0.25
Lukewarm ? 0.5
Dynamite! 0.4 0.25
a. 20%
b. 30%
,c. 40%
d. It is impossible to determine. Correct Answers B
QN=405 (20665) Babs purchased a piece of real estate last year
for $85,000. The real estate is now worth $102,000. If Babs
needs to have a total return of 25 percent during the year, then
what is the dollar amount of income that she needed to have to
reach her objective?
a. $3,750
b. $4,250
c. $4,750
d. $5,250 Correct Answers B
QN=406 (20693) The expected return on Kiwi Computers stock
is 16.6 percent. If the risk-free rate is 4 percent and the expected
return on the market is 10 percent, then what is Kiwi's beta?
a. 1.26
b. 2.10
c. 2.80
d. 3.15 Correct Answers B
QN=407 (20654) The expected return for the asset below is
18.75 percent. If the return distribution for the asset is described
as in the following table, what is the variance for the asset's
returns?
Return Probability
0.1 0.25
0.2 0.5
0.25 0.25
,a. 0.002969
b. 0.000613
c. 0.015195
d. 0.054486 Correct Answers A
QN=408 (20669) You have observed that the average size of a
particular goldfish is 1.5 inches long. The standard deviation of
the size of the goldfish is 0.25 inches. What is the size of a
goldfish such that 95 percent of the goldfish are smaller?
Assume a normal distribution for the size of goldfish.
a. 1.01 inches
b. 1.09 inches
c. 1.91 inches
d. 1.99 inches Correct Answers C
QN=409 (20685) The covariance of the returns between Einstein
Stock and Bohr Stock is 0.0087. The standard deviation of
Einstein is 0.26, and the standard deviation of Bohr is 0.37.
What is the correlation coefficient between the returns of the
two stocks?
a. 0.090437
b. 0.096200
c. 0.90437
d. 0.96200 Correct Answers A
QN=410 (20660) Julio purchased a stock one year ago for $27.
The stock is now worth $32, and the total return to Julio for
owning the stock was 37 percent. What is the dollar amount of
dividends that he received for owning the stock during the year?
a. $4
b. $5
, c. $6
d. $7 Correct Answers B
QN=411 (20681) Given the returns for two stocks with the
following information, calculate the covariance of the returns for
the two stocks. Assume the expected return is 10.8 percent for
Stock 1 and 9.7 percent for Stock 2.
Prob Stock 1 Stock 2
0.4 0.09 0.11
0.5 0.11 0.08
0.1 0.17 0.13
a. 0.000094
b. 0.00051600
c. 0.00032100
d. 0.71750786 Correct Answers A
QN=412 (20678) You have invested 40 percent of your portfolio
in an investment with an expected return of 12 percent and 60
percent of your portfolio in an investment with an expected
return of 20 percent. What is the expected return of your
portfolio?
a. 15.2%
b. 16.0%
c. 16.8%
d. 17.6% Correct Answers C
QN=413 (20683) Given the returns for two stocks with the
following information, calculate the covariance of the returns for
