Premium Essay

Finance 201

In:

Submitted By HeroNYC
Words 1318
Pages 6
FINC 201 Final Exam

June 29th, 2012

Name:___________________________________

Circle the best answer for each of the following.

1. Investor activity and the impact of that activity on expected returns ensures that ___________.
a. all assets will have the same degree of systematic risk
b. each firm’s reward to risk ratio will be based on a different risk free rate of return
c. systematic risk can be diversified away
d. assets in a well organized, active market, will have the same reward to risk ratio
e. all assets will have the same risk premium

2. Unsystematic risk is also known as ___________.
a. total risk
b. systematic risk
c. diversifiable or firm specific risk
d. non-diversifiable risk
e. specific risk

3. Which of the following is true regarding the beta coefficient?
a. It is a measure of unsystematic risk
b. A beta greater than one represents lower systematic risk than the market
c. Generally speaking, the higher the beta the higher the expected return
d. A beta of one indicates an asset is totally risk free
e. The risk premium of an asset will increase if the beta of that asset decreases

4. Which of the following describe(s) a portfolio that plots below the security market line?
a. The security is undervalued
b. The security is providing a return that is higher than expected
c. The security is overvalued
d. The security’s beta is too low
e. The security provides a return that exceeds the average return on the market

5. What is the expected return for the following stock? State Probability E(Ri) Average .55 .20 Recession .20 .10 Depression .25 -.20
a. .055
b. .080
c. .095
d. .105
e. .110

6. What is the risk premium if the risk-free rate is 5%? Note: E(R)=Risk Free Rate + Risk Premium State Probability E(Ri) Boom .15 .6 Good .50 .2 Recession .25 -.1 Depression .10 -.3

Similar Documents

Free Essay

Ujgwej

...TIME TABLE – PGDM (GENERAL) fourth Trimester - SECTION – A W.E.F. (09-Jul-2012 to 19-sept-2012) (Room No. 204 Unless Noted Otherwise) |Time Slots |8.45 to 10.00AM |10.15 to 11.30AM |11.45 to 1.00PM | |2.15 to 3.30PM |3.45 to 5.00PM |5.15 to 6.30PM | | | | | | | | | | |Week Days | | | |L | | | | | | | | |U | | | | | | | | |N | | | | | | | | |C | | | ...

Words: 617 - Pages: 3

Free Essay

Doctor

...Journal of Business & Economic Statistics 27, 417427. Baker, M. and J. Wurgler (2006). Investor sentiment and the cross-section of stock returns. Journal of Finance 61, 16451680. Baker, M. and J. Wurgler (2007). Investor sentiment in the stock market. Journal of Economic Perspectives 21, 129151. Baker, M., J. Wurgler, and Y. Yuan (2011). Global, local, and contagious investor sentiment. Journal of Financial Economics . Barberis, N., A. Shleifer, and R. Vishny (1998). A model of investor sentiment. Journal of Financial Economics 49, 307343. Ben-Rephaela, A., S. Kandela, and A. Wohla (2012). Measuring investor sentiment with mutual fund ows. Journal of Financial Economics 104, 363382. Bergsma, K. and D. Jiang (2013). Let's celebrate! cultural new year and stock returns around the world. Working paper, Florida State University. 30 Bodurtha, J. N., D. S. Kim, and C. Lee (1995). Closed-end country funds and u.s. market sentiment. Review of Financial Studies Vol. 8(3), pp. 879918. Bollen, J., H. Mao, and X. Zeng (2011). Twitter mood predicts the stock market. Journal of Computational Science 2 (1), pp. 18. Brown, W. G. and M. T. Cli (2005). Investor sentiment and asset valuation. Journal of Business 78(2), 405440. Campbell, J., S. J. Grossman, and J. Wang (1993). Trading volume and serial correlation in stock returns. Quarterly Journal of Economics 108(4), 905939. Choi, H. and H. R. Varian (2009). Predicting...

Words: 1408 - Pages: 6

Premium Essay

Ecoz

...| People Data | Name | : | Kadzinga, Steven Tawanda | ID | : | 2013050011 | Birthday | : | 22/08/1991 | Assessment Data | Program | : | Bachelor of Business Administration Accounting | Center | : | Main Campus | Bulletin | : | 2010-2012 Bulletin | Date Start | : | 01/05/2013 | Date End | : | 31/12/2017 | Basis of Adm. | : | 2 'A' Levels Plus 6 'O' Levels | Observation | : | | Advisor | Name | : | Ndlovu, Ivonne Lec - Lecturer | Title | : | | Academic Variables | Admission Status | Date | Type | Document | 01/05/2013 | Regular | 1 | | Academic Status | Date | Type | Document | 01/05/2013 | Active | 1 | | Documents Control | Academic Record | 2013 1st Semester :: Main Campus | Mode / Type / Cond | Crd. | Grd. | Qpt. | | | MATH | 181 | Business Algebra | Reg / Core / regular | 3.00 | C | | | | INSY | 110 | Computers and Business Information Systems | Reg / Core / regular | 3.00 | B | 7.00 | | | CONV | 101 | Convocation [1st Year 1st Semester] | Reg / Core / regular | 0.00 | S | 0.00 | | | ACCT | 111 | Financial Accounting 1A | Reg / Core / regular | 4.00 | C | 8.00 | | | ORIE | 100 | Orientation | Reg / Core / regular | 0.00 | S | 0.00 | | | RELT | 215 | Philosophy of Christian Education | Reg / Core / regular | 2.00 | | 0.00 | | | MGMT | 155 | Principles of Management | Reg / Core / regular | 3.00 | B+ | 7.00 | | | ECON | 215 | Principles of Microeconomics | Reg / Core / regular | 3...

Words: 610 - Pages: 3

Premium Essay

Admission

...Does your career plan include a world of lifelong success? Program of Professional Studies THE CERTIFIED GENERAL ACCOUNTANTS ASSOCIATION OF BRITISH COLUMBIA We see more than numbers. Choose a career that places you on the path to lifelong success. It’s all about opportunity. Accounting professionals can work in any sector, anywhere in the world. And when you choose CGA, you’ll gain the leadership, problem-solving and technical skills that are sought after by organizations in the private, public and not-for-profit sectors. The CGA Program of Professional Studies gives you the tools to succeed in business, no matter where your career takes you. You’ll enter the workforce with the applied knowledge and demonstrated expertise that employers want, including specialized technical knowledge, sectorspecific competencies, problem-solving skills and the ethical integrity to lead. CGA’s competency-based curriculum is simply your best way to prepare for a rewarding career in financial management. Flexible study options and the freedom to choose the career you want CGA is all about choice. You choose the professional-studies path and real-world experience that best match your career goals and interests. We give you the skills and freedom to work in any type of organization, in any industry, at any level of management. With a CGA designation, your opportunities—both professional and personal, at home and around the world—are limitless. Take your place as a highly respected...

Words: 4906 - Pages: 20

Premium Essay

The Function of Financial Markets

...TOPIC  7  –  FINANCIAL  MARKETS   Eco 304L   Fall  2014   Topic  6  –  Financial  Markets   The  Financial  System  -­‐  How  Businesses  Finance   Themselves   Saving  and  Investment  (National  Income   Accounting  Redux)   Ricardian  Equivalence  and  Temporary  vs.   Permanent  Taxt  Cuts   The  Market  For  Loanable  Funds  –  Modeling   Financial  Markets     1   Topic  6  –  Financial  Markets   The  Financial  System  -­‐  How  Businesses  Finance   Themselves     The  Financial  System   The  Pinancial  system  is  made  up  of  !inancial   institutions  that  bring  borrowers  and  lenders   together   ¤  Financial  markets:    institutions  through  which   borrowers  and  lenders  come  together  directly   ¤  bond  markets   n  stock  markets   n  ¤  Financial  intermediaries:    organizations  that   interact  with  borrowers  and  lenders  separately  and   bring  them  together  indirectly   banks   n  mutual  fund   n    2   Financing  a  company   ¨  How  can  a  company  raise  funds?   Self-­‐!inance   ¤  Borrow  indirectly...

Words: 1610 - Pages: 7

Premium Essay

Source of Finance

...Research Paper No. 2009/03 Source of Finance, Growth and Firm Size – Evidence from China Jun Du1 and Sourafel Girma2 January 2009 Abstract Using a comprehensive firm-level dataset spanning the period 1998-2005, this paper provides a thorough investigation of the relationship between firm size, total factor productivity growth and financial structure in China, controlling for the endogeneity of the latter. Generally, it finds financing source matters for firms of different size, and the extent to which financing source matters for firm growth is greater for small firms than big firms. Self-raised finance appears to be most effective in promoting small firms to grow, and bank loan seems to be more supportive to big firms. The relationship between size, finance and growth also depends on ownership. In addition, there exist strong complementarities between formal and informal finance, as well as between indigenous and foreign finance. Keywords: China, finance, firm size, growth JEL classification: O5, G2, L11, L25, O1 Copyright © UNU-WIDER 2009 1 Aston University, UK, e-mail: j.du@aston.ac.uk; 2 Nottingham University Business School, UK, e-mail: Sourafel.Girma@nottingham.ac.uk This study has been prepared within the UNU-WIDER project on Southern Engines of Global Growth, co-directed by Amelia U. Santos-Paulino and Guanghua Wan. UNU-WIDER gratefully acknowledges the financial contributions to the research programme by the governments of Denmark (Royal Ministry of Foreign...

Words: 11124 - Pages: 45

Premium Essay

Sox Regulations

...The Impact of Sarbanes-Oxley Act of 2002 on Accounting and Finance Departments Danika Grace Brown Lakeland College Kellett School of Business – BlendEd BA 772 Advanced Industrial Accounting II Instructor Mary Diederich March 10, 2015 Table of Contents Abstract 2 Overview of the Sarbanes-Oxley Act of 2002 3 About SOX 4 Reporting and Compliance 5 Risk Assessment and Control 6 Interview at Company X 7 Standards for Corporations and Officers 8 Auditing and Financial Reporting 9 Future Impact of SOX 10 Conclusion 11 References 13 Abstract Sarbanes-Oxley is the response from Congress in regards to the financial industry collapse that happened over a decade ago. Due to unethical reporting from corporations, Sarbanes-Oxley (SOX) is a United States federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms. As a result of SOX, top management must individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Furthermore, SOX increased the oversight role of boards of directors and the independence of the outside auditors who review the accuracy of corporate financial statements. This paper will look to provide an oversight of the law and how it pertains to the standards in Accounting and Finance departments nowadays. In addition, this paper will also touch on the ongoing costs and benefits of the now standard...

Words: 3586 - Pages: 15

Premium Essay

Business Environment

...LO1 Understand the sources of finance available to a Business Finance is the most vital thing to run the business. Companies operating as commercial entities must have sufficient cash balances to facilitate their smooth operations. Cash requirement can be raised from different sources, ranging from equity, various forms of debt, to internally generated funds through retained earnings which would otherwise be distributed to shareholders (Myers and Myers, 1991; J. Gitman, 1991). The sources of finance can be classified as Internal and External, Short-term and Long-term or Equity and Debt (Bromwich & Bhimani, 2009, pp.45). The two main sources of finance for business include internal and external sources. The business managers decide which form of financing to be used in the business (Klammer, 2003, pp.35). Internal Sources of Finance Personal funds - utilized by sole traders and partnerships. Owner takes on risk of losing their money. Family and friends - utilized by sole traders and partnerships. Friends can not only lose money but also harm relationships Selling assets - Dormant (unused) assets are typically sold. Selling of fixed assets that are currently in use may solve liquidity problems but create future production problems. Retained profit - Profits reinvested back into the business External Sources of Finance Share capital - limited companies selling shares. #1 way for limited companies to raise money and can provide up to billions. Venture capital - invest...

Words: 5525 - Pages: 23

Premium Essay

Finance

...National Cheng-Chi University 研究所MBA: Tuesdays 6:10-9 Commerce Building 260306 Yee-Tien (Ted) Fu Undergraduate: Tuesdays 9:10:noon Commerce 260508 Autumn 2009 (3 units) Course Objective This course examines important issues in the rapidly evolving area of international financial markets. It focuses on various aspects of international portfolio management and open-economy macroeconomics, and is a natural extension to the theories and practical issues explored in Investments and/or Finance. This course is aimed at students wishing to acquire a sound understanding of the main opportunities in international investments. For example, the relevance of hedging in the management of currency risk will be studied in light of theoretical results and empirical evidence. We will also briefly cover foreign direct investment (FDI), since in general, the revenue generated from FDI by U.S. firms is about three times as large as the revenue generated from the exporting of U.S. goods by U.S. firms. Due to the ever increasing importance of international corporate governance, there is a corresponding need to decipher and use information in financial reports. At least one class meeting and one case study will touch on some key issues in international financial reporting and analysis, such as financial disclosure/transparency, incentives for off-balance sheet liabilities, hedge accounting, lease accounting, footnote disclosures, and intercorporate equity investments, and international...

Words: 1941 - Pages: 8

Premium Essay

Project Financing

...Project Financing Asset-Based Financial Engineering Second Edition JOHN D. FINNERTY, Ph.D. John Wiley & Sons, Inc. Project Financing Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding. The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors. Book topics range from portfolio management to e-commerce, risk management, financial engineering, valuation, and financial instrument analysis, as well as much more. For a list of available titles, visit our Web site at www.WileyFinance.com. Project Financing Asset-Based Financial Engineering Second Edition JOHN D. FINNERTY, Ph.D. John Wiley & Sons, Inc. Copyright C 2007 by John D. Finnerty. All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. Wiley Bicentennial Logo: Richard J. Pacifico No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States...

Words: 114949 - Pages: 460

Premium Essay

Acf 2011 Sem 2

...Accredited Tertiary Courses Listing 2012 Accredited Tertiary Courses Listing 2012 – as at 26 September 2012 1 2012 Accredited Undergraduate Courses AUSTRALIAN CAPITAL TERRITORY The Australian National University University of Canberra NEW SOUTH WALES Australian Catholic University Australian Institute of Higher Education Avondale College Charles Sturt University Kings Own Institute Macquarie University Southern Cross University Top Education Institute The University of New England The University of New South Wales The University of Newcastle The University of Sydney University of Technology, Sydney University of Western Sydney University of Wollongong Williams Business College NORTHERN TERRITORY Charles Darwin University QUEENSLAND Australian Catholic University Bond University Central Queensland University Christian Heritage College Griffith University James Cook University Queensland University of Technology The University of Queensland The University of Southern Queensland University of the Sunshine Coast SOUTH AUSTRALIA Flinders University Kaplan Business School The University of Adelaide University of South Australia Open Universities (conferred by Uni of SA) TASMANIA University of Tasmania VICTORIA Australian Catholic University Cambridge International College Carrick Higher Education Deakin University Holmes Institute Holmesglen Institute of TAFE La Trobe University Melbourne Institute of Technology Monash University Northern Melbourne Institute of TAFE RMIT...

Words: 16200 - Pages: 65

Premium Essay

Procedures on the Administration of Information Disclosure of Listed Companies

...Procedures on the Administration of Information Disclosure of Listed Companies China Securities Regulatory Commission 01-30-2007 Order of the China Securities Regulatory Commission [2007] No. 40 The Procedures on the Administration of Information Disclosure of Listed Companies deliberated and adopted at the 196th Chairman Working Meeting of the China Securities Regulatory Commission are hereby promulgated and shall be effective as of the date of promulgation. Appendix: Procedures on the Administration of Information Disclosure of Listed Companies Chapter 1: General Provisions Article 1: These Procedures are formulated in accordance with the Company Law, the Securities Law and other laws and administrative regulations in order to regulate information disclosure of issuers, listed companies and other persons with information disclosure obligations, to strengthen the administration of information disclosure affairs and to protect the lawful rights and interests of investors. Article 2: Persons with information disclosure obligations shall disclose information truthfully, accurately, completely and timely and there shall be no falsehood, misleading representation or major omission. Persons with information disclosure obligations shall make public information disclosure to all investors at the same time. Where companies that issue and list securities and...

Words: 6439 - Pages: 26

Free Essay

Economic Survey 2005-10

...Public Debt  8   Recent developments with regard to the sovereign debt situation of countries ranging from Iceland to  the United Arab Emirates, and more recently, of countries in the Euro‐zone, most prominently Greece,  have been a rude awakening for global financial markets. After a protracted period of benign neglect,  policymakers  as  well  as  investors  are  beginning  to  scrutinize  more  carefully  the  health  of  sovereign  public finances.   Lessons  from  previous  debt  crises  are  being  re‐learnt.  Escalating  public  debt  does  not  bode  well  for  macro‐economic  stability  and  growth  as  it  exerts  upward  pressure  on  interest  rates  and  crowds‐out  domestic  private  investment.  For  developing  countries,  the  higher  interest  cost  associated  with  domestic  debt  places  a  substantial  strain  on  budgetary  resources,  with  a  negative  spill‐over  effect  on  social  sector  and  development  outlays  and  a  slowdown  in  growth  momentum.  For  external  debt,  creditors may charge a lower interest rate (as is the case with most multilateral and bilateral donors),  but  the  exchange  rate  risk  inherent  in  the  accumulation  of  foreign  currency  debt  leaves  a  country  vulnerable  to  developments  on  the  external  account  and  in  international  markets.    Therefore,  policymakers are faced with choices not only of what levels of public debt to accumulate, but also the  composition of the portfolio with regards to source...

Words: 5745 - Pages: 23

Free Essay

Risk Management in Islamic Banking and Finance

...RISK MANAGEMENT IN ISLAMIC BANKING AND FINANCE:  THE ARAB FINANCE HOUSE EXAMPLE  Bilal A. Fleifel  A Thesis Submitted to the  University of North Carolina Wilmington in Partial Fulfillment  of the Requirements for the Degree of  Master of Business Administration  Cameron School of Business  University of North Carolina Wilmington  2009  Approved By  Advisory Committee  Howard Rasheed  Cetin Ciner  William H. Sackley  Chair  Accepted By  DN: cn=Robert D. Roer, o=UNCW, ou=Dean of the Graduate School & Research, email=roer@uncw. edu, c=US Date: 2010.01.21 15:02:51 -05'00' ________________________  Dean, Graduate School TABLE OF CONTENTS  TABLE OF CONTENTS ..................................................................................................... ii  ABSTRACT........................................................................................................................ vi  ACKNOWLEDGMENTS .................................................................................................. vii  DEDICATION .................................................................................................................. viii  LIST OF TABLES .............................................................................................................. ix  LIST OF FIGURES...............................................................................................................x  GLOSSARY .............................

Words: 34301 - Pages: 138

Premium Essay

Eastboro Machine Tools Corporation

...MBA Program Course: Financial Analysis and Decision Making MBA730 Instructor: Marlena L. Akhbari Wright State University Finance and Financial Services McGraw-Hill/Irwin =>? McGraw−Hill Primis ISBN: 0−390−42334−3 Text: Case Studies in Finance: Managing for Corporate Value Creation, 4/e Bruner This book was printed on recycled paper. MBA Program http://www.mhhe.com/primis/online/ Copyright ©2003 by The McGraw−Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher. This McGraw−Hill Primis text may include materials submitted to McGraw−Hill for publication by the instructor of this course. The instructor is solely responsible for the editorial content of such materials. 111 MBAP ISBN: 0−390−42334−3 MBA Program Contents Bruner • Case Studies in Finance: Managing for Corporate Value Creation, 4/e II. Financial Analysis and Forecasting 1 1 6 16 16 39 52 52 60 66 66 84 100 100 6. The Financial Detective, 1996 11. ServerVault: ‘‘Reliable, Secure, and Wicked Fast’’ III. Estimating the Cost of Capital 12. ‘‘Best Practices’’ in Estimating the Cost of Capital: Survey and Synthesis 15. Teletech Corporation, 1996 IV. Capital Budgeting and Resource Allocation 19. Diamond...

Words: 54708 - Pages: 219