Fin316 Final Exam Practice

a.) If you were to sell that same amount of stock in a few years at $55.12 per

b. If you inherited $100,000 today and invested all of it in a security that paid an 8% rate of return, how much would you have in 15 years?

This gives the production manager a 62.5% prediction that the economy will be weak and an 83.3% prediction that economy will be strong.

I will invest in dividend stocks that are growing and pay every 3 months. Ten years ago Wal-Mart was 45 dollars a share now it is $97. It has gone up over one hundred percent. In 2017 the stock went from $70 to currently $97—an increase over 38 percent. Since Wal-Mart’s dividends have gone up for 44 years and the stock has gone up. I will invest in Wal-Mart

8-20 Value a Constant Growth Stock Financial analysts forecast Limited Brands’ (LTD) growth rate for the future to be 12.5 percent. LTD’s recent dividend was $0.60. What is the value of Limited Brands’ stock when the required return is 14.5

The beta of a stock measures the risk of the stock. However, is not not just any risk, it is the risk that you should expect to be rewarded for

The 2008 global financial crisis (GFC) (Shah 2009, p. 25) has caused the share prices of BHP, CBA and TLS to drop rapidly from 2008 to 2009, apparent from the 10-year historical data of the three companies’ share price (Appendix 1). This shows that the all three companies’ share prices are influenced by the GFC, which means the GFC has the similar result in the calculation of three stocks’ expected return. Hence, the data from that period are included in the data choice.

stock price of $6.50, and a volatility of 40% (as indicated in the assignment question), yields values of

1. The case gave a table that had the rate or return under certain conditions and from that we found the expected returns, standard deviations, and coefficients of variations for the assets. For the expected returns we took the probability and multiplied that by the rate of return for each type of economy, and then added them all up. To get standard deviation you must first calculate the variance. For that we took the rate of return minus expected return, squared that difference, multiplied that by the probability, and then summed them up. The get the standard deviation we

You are going to pay $100 into an account at the beginning of each of the next 40 years. At the beginning of

A.) One defect of the IRR method is that it does not take account of cash flows over a project's full life.

You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for one year. You expect to receive both $1.25 in dividends and $35 from the sale of the share at the end of the year. The maximum price you would pay for a share today is __________ if you wanted to earn a 12% return. $31.25 $32.37 $38.47 $41.32

a. Find the Expected Rate of Return on the Market Portfolio given that the Expected Rate of Return on Asset "i" is 12%, the Risk-Free Rate is 4%, and the Beta (b) for Asset "i" is 1.2.

considered to be linked to stock prices. Dilon and Owers (1997) argues that, if the

Diff: 1 Topic: 9.1 Stock Prices, Returns, and the Investment Horizon S k i l l : A n a l y t i c a l