Satisfactory Essays

- 2436 Words
- 10 Pages

User

Ms Julie Ciarlante

Course

FIN-601-001 - FA 13-14

Test

FIN 601 Final Exam

Started

12/12/13 7:19 PM

Submitted

12/12/13 9:25 PM

Status

Completed

Attempt Score

126 out of 135 points

Time Elapsed

2 hours, 5 minutes out of 5 hours.

Question 1

3 out of 3 points

A bond with an annual coupon of $70 and originally sold at par for $1,000. The current market interest rate (yield to maturity) is 8%. This bond will sell at _______. Assuming no change in market interest rates, the bond will present the holder with capital ________ as it matures.

.

Answer

Selected Answer: B. discount; gains

Correct Answer: B. discount; gains

Question 2

3 out of 3 points

Given two comparable bonds A*…show more content…*

I. The greater the standard deviation, the lower the risk.

II. The standard deviation is a measure of volatility.

III. The higher the standard deviation, the less certain the rate of return in any one given year.

IV. The higher the standard deviation, the higher the expected return.

.

Answer

Selected Answer: B.

II, III, and IV only

Correct Answer: B.

II, III, and IV only

Question 13

3 out of 3 points

The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the

.

Answer

Selected Answers: C. risk premium

Correct Answers: C. risk premium

Question 14

3 out of 3 points

You recently purchased a stock that is expected to earn 12% in a booming economy, 8% in a normal economy and lose 5% in a recessionary economy. There is a 15% probability of a boom, a 75% chance of a normal economy, and a 10% chance of a recession. What is your expected rate of return on this stock?

.

Answer

Selected Answer: C.

7.30%

Correct Answer: C.

7.30%

Question 15

3 out of 3 points

Risk that affects at most a small number of assets is called _____ risk.

.

Answer

Selected Answer: D. unsystematic Correct Answer: D. unsystematic Question 16

3 out of 3 points

Which of the following would be considered an example of systematic risk?

.

Ms Julie Ciarlante

Course

FIN-601-001 - FA 13-14

Test

FIN 601 Final Exam

Started

12/12/13 7:19 PM

Submitted

12/12/13 9:25 PM

Status

Completed

Attempt Score

126 out of 135 points

Time Elapsed

2 hours, 5 minutes out of 5 hours.

Question 1

3 out of 3 points

A bond with an annual coupon of $70 and originally sold at par for $1,000. The current market interest rate (yield to maturity) is 8%. This bond will sell at _______. Assuming no change in market interest rates, the bond will present the holder with capital ________ as it matures.

.

Answer

Selected Answer: B. discount; gains

Correct Answer: B. discount; gains

Question 2

3 out of 3 points

Given two comparable bonds A

I. The greater the standard deviation, the lower the risk.

II. The standard deviation is a measure of volatility.

III. The higher the standard deviation, the less certain the rate of return in any one given year.

IV. The higher the standard deviation, the higher the expected return.

.

Answer

Selected Answer: B.

II, III, and IV only

Correct Answer: B.

II, III, and IV only

Question 13

3 out of 3 points

The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the

.

Answer

Selected Answers: C. risk premium

Correct Answers: C. risk premium

Question 14

3 out of 3 points

You recently purchased a stock that is expected to earn 12% in a booming economy, 8% in a normal economy and lose 5% in a recessionary economy. There is a 15% probability of a boom, a 75% chance of a normal economy, and a 10% chance of a recession. What is your expected rate of return on this stock?

.

Answer

Selected Answer: C.

7.30%

Correct Answer: C.

7.30%

Question 15

3 out of 3 points

Risk that affects at most a small number of assets is called _____ risk.

.

Answer

Selected Answer: D. unsystematic Correct Answer: D. unsystematic Question 16

3 out of 3 points

Which of the following would be considered an example of systematic risk?

.

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Satisfactory Essays