1. Indicate which of the following ratios are classified as Liquidity, Risk, Operating or Value ratios.

• Current Ratio
• Asset Coverage
• Inventory Turnover
• Dividend Yield
• Debt/Equity
• Gross Profit Margin
• Return on Common Equity
• EPS

2. A client bought a stock for $50/share and sold it for $70/share. Inflation during the period was 3%. What is the investor's real return? Show all calculations.

3. The expected rate of return on Tom's portfolio is 18%. His fund manager is expected to achieve this return with a risk of 1.5 Standard Deviation. Given that the risk free rate of return is 3%, what is the risk adjusted rate of return -Sharpe Ratio?

4. Larry bought 500 shares of TD Bank at $75 per share. Two years later he sold all the shares for $80 each. Excluding commission cost, what is the total return on the stock?

5. XYZ Inc. is expected to payout a dividend of $8. It is predicted that the company will continue to grow at a rate of 3% per year. However, investors require a 6% rate of return per annum. At present, XYZ Inc. shares are worth $200 per share. John who already owns some shares of XYZ Inc. is wondering what investment decisions are available to him? Show step by step how you arrive at your decision by showing all formulas, calculations and explanations.

6. State which of the following is a primary or secondary investment objective:

• Liquidity
• income
• growth
• tax minimization
• safety

7. Describe the investment strategy that investors should follow with respect to stocks during each of the phases in the equity cycle

• contraction
• through
• expansion
• peak

8. Larry's Advisor charged him 4% commissions to buy LMN Balanced Mutual fund. So far the fund has sold 2 million units. The expenses of the fund is $3,000,000 and the assets are worth $31 million.

a) What is the net asset value per share of the fund?

b) What is the offering price?