1You hold a portfolio with the following securities:

Percent

Security of Portfolio Beta Return

X Corporation 20% 1.35 14%

Y Corporation 35% .95 10%

Z Corporation 45% .75 8%

Compute the expected return and beta for the portfolio.

Select one:

A. 9.9%, .94

B. 10.67%, 1.02

C. 34.4%, .94

D. 9.9%, 1.02

2Which of the following is NOT true for limited partnerships?

Select one:

A.

Limited partners can only manage the business.

B.

Only the name of general partners can appear in the name of the firm.

C.

Limited partners may sell their interest in the company.

D. One general partner must exist who has unlimited liability.

3Which of the following best describes the goal of the firm?

Select one:

A.

None of the others

B.

The maximisation of the total market value of the firm's common stock

C.

Risk minimisation

D.

Profit maximisation

4Francis Peabody just won the $89,000,000 Oz Lotto prize. The lottery offers the winner a choice of receiving the winnings in a lump sum or in 26 equal annual installments to be made at the beginning of each year. Assume that funds would be invested at 7.65%. Francis is trying to decide whether to take the lump sum or the annual installments. What is the amount of the lump sum that would be exactly equal to the present value of the annual installments? Round off to the nearest $1.

Select one:

A. $38,163,612

B. $41,083,128

C. $13,092,576

D. $89,000,000

5

Using the following information for an M2 Group Limited share, calculate their expected return and standard deviation.

State Probability Return

Boom 20% 40%

Normal 60% 15%

Recession 20% -20%

Select one:

A. 13%, 19.13%

B. 13.7%, 19.90%

C. 14%, 20.13%

D. 12.4%, 18.2%