1-

LSP Corporation wishes to determine the required return on asset Z, which has a beta of 1.5. The risk-free rate of return is 7%; the return on the market portfolio of assets is 11%. What is the required rate of return using CAPM? *

a) 11%

b) 13%

c) 14%

d) 15%

e) None of the above

2-

An issue of preferred stock is paying an annual dividend of $1.50. The growth rate for the firm's common stock is 5%. What is the preferred stock price if the required rate of return is 7%? *

a) $21.43

b) $30.00

c) $22.50

d) $50.32

e) None of the above

3-

MIRAJs stock has 30% chance of producing a 15% return, a 40% chance of producing a 10% return, and a 30% chance of producing a 2% return. What is the firm's expected rate of return? *

a) 7.8%

b) 8.2%

c) 9.1%

d) 10.2%

e) None of the above

4-

. Find the present value of an ordinary annuity with payments of $500 a year for 5 years, if interest rates are 8% compounded semiannually. *

a) $1996.36

b) $1701.46

c) $2993.30

d) $1656.06

e) None of the above