FINA 3000 - True / False Questions (Practice Exam)
- EXAM 2 questions and solutions
For mutually exclusive projects, the NPV rule takes priority over the IRR rule:
ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
For the capital asset pricing model, the risk-free rate is yield to maturity on a 90-day Treasury bill:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
One large cause of the financial crisis was that mortgages were assigned low credit ratings despite solid
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
financial history from the homeowner:
ji ji ji ji ji
- (T/F) - answers- False
ji ji ji ji
Putting any two assets in a portfolio creates diversification benefits as long as the correlation is less than 1:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The beta of the market portfolio is 1:
ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
Market risk can be diversified away in a balanced portfolio:
ji ji ji ji ji ji ji ji ji
- (T/F) - answers- False
ji ji ji ji
Verizon decided to acquire Yahoo! in an effort to gain more users which will increase advertising revenue:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The capital gain yield for a stock can be negative or positive:
ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The U.S. economy shows an increase in unemployment claims in September.
ji ji ji ji ji ji ji ji ji ji ji
This is an example of firm specific risk:
ji ji ji ji ji ji ji
- (T/F) - answers- False
ji ji ji ji
The IRR and NPV rules are always consistent for independent projects:
ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
A small business owner would likely have a lower payback cutoff for a project than a corporation:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The Federal Reserve Bank surprises the market by announcing an unexpected increase in the risk free rate.
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
The price of individual stocks will now increase as stocks are undervalued after the rate change:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The slope of the security market line is beta:
ji ji ji ji ji ji ji ji
- (T/F) - answers- False
ji ji ji ji
The futures for the Dow Jones Industrial Average increased during the first Presidential debate.
ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- EXAM 2 questions and solutions
For mutually exclusive projects, the NPV rule takes priority over the IRR rule:
ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
For the capital asset pricing model, the risk-free rate is yield to maturity on a 90-day Treasury bill:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
One large cause of the financial crisis was that mortgages were assigned low credit ratings despite solid
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
financial history from the homeowner:
ji ji ji ji ji
- (T/F) - answers- False
ji ji ji ji
Putting any two assets in a portfolio creates diversification benefits as long as the correlation is less than 1:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The beta of the market portfolio is 1:
ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
Market risk can be diversified away in a balanced portfolio:
ji ji ji ji ji ji ji ji ji
- (T/F) - answers- False
ji ji ji ji
Verizon decided to acquire Yahoo! in an effort to gain more users which will increase advertising revenue:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The capital gain yield for a stock can be negative or positive:
ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The U.S. economy shows an increase in unemployment claims in September.
ji ji ji ji ji ji ji ji ji ji ji
This is an example of firm specific risk:
ji ji ji ji ji ji ji
- (T/F) - answers- False
ji ji ji ji
The IRR and NPV rules are always consistent for independent projects:
ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
A small business owner would likely have a lower payback cutoff for a project than a corporation:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The Federal Reserve Bank surprises the market by announcing an unexpected increase in the risk free rate.
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
The price of individual stocks will now increase as stocks are undervalued after the rate change:
ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji
- (T/F) - answers- True
ji ji ji ji
The slope of the security market line is beta:
ji ji ji ji ji ji ji ji
- (T/F) - answers- False
ji ji ji ji
The futures for the Dow Jones Industrial Average increased during the first Presidential debate.
ji ji ji ji ji ji ji ji ji ji ji ji ji ji
