FIN/370T Finance for Business
The Latest Version A+ Study Guide
************************************* FIN 370 Entire Course Link https://uopcourses.com/category/fin-370/ ************************************* FIN 370 Week 4 Practice Week 4 Knowledge Check Which of the following is correct? Multiple Choice • All of the statements are correct. • In some years, long-term Treasury bonds performed better than stocks. •
Over a long time frame, stocks have performed better than long-term Treasury bonds. • Average stock returns are not an indication of what an investor may earn in any one year.
The optimal portfolio for you will be: Multiple Choice • the one that reflects the amount of risk that you are willing to take. • the one that offers the highest returns. • the one that offers the lowest correlation. • the one that offers the most diversification.
Year-to-date, Oracle had earned a 12.57 percent return. During the same time period, Valero Energy earned
−9.32 percent and McDonald's earned 3.45 percent. If you have a portfolio made up of 60 percent Oracle, 20 percent Valero Energy, and 20 percent McDonald's, what is your portfolio return? Multiple Choice • 6.70 percent • 10.10 percent • 6.37 percent • 8.45 percent
Which of these is the reward for taking systematic stock market risk? Multiple Choice • Required return • Risk premium
• Market risk premium • Risk-free rate
You have a portfolio consisting of 20 percent Boeing (beta = 1.3) and 40 percent Hewlett-Packard (beta = 1.6) and 40 percent McDonald's stock (beta = 0.7). How much market risk does the portfolio have? Multiple Choice • This portfolio has 28 percent less risk than the general market. • This portfolio has 18 percent more risk than the general market. • This portfolio has 18 percent less risk than the general market. • This portfolio has 28 percent more risk than the general
market.
A company's current stock price is $22.00 and its most recent dividend was $0.75 per share. Since analysts estimate the company will have a 12 percent growth rate, what is its expected return? Multiple Choice • 12.00 percent • 15.82 percent • 3.00 percent • 3.48 percent
Which of the following will impact the cost of equity component in the weighted average cost of capital? Multiple Choice
• Beta • All of the above • Expected return on the market • The risk-free rate
The reason that we do not use an after-tax cost of preferred stock is: Multiple Choice • because most of the investors in preferred stock do not pay tax on the dividends. • because preferred dividends are paid out of before-tax income. • None of the options are correct. •
because we can only estimate the marginal tax rate of the preferred stockholders.
Diddy Corp. stock has a beta of 1.0, the current risk-free rate is 5 percent, and the expected return on the market is 15.5 percent. What is Diddy's cost of equity? Multiple Choice • 14.20 percent • 18.50 percent • 16.30 percent • 15.50 percent
Which of the following is a principle of capital budgeting which states that the calculations of cash flows should remain independent of financing? Multiple Choice
• Financing principle • Separation principle • Generally accepted accounting principle • WACC principle