4. If all investors become more risk averse the Security Market Line will _______________ and stock prices will _______________. (Points : 1)

shift upward; rise

shift downward; fall

have the same intercept with a steeper slope; fall

have the same intercept with a flatter slope; rise

14. You wish to earn a return of 11% on each of two stocks, A and B. Stock A is expected to pay a dividend of $3 in the upcoming year while stock B is expected to pay a dividend of $2 in the upcoming year. The expected growth rate of dividends for both stocks is 4%. Using the constant growth DDM, the intrinsic value of stock A _________. (Points : 2)

will be higher than the intrinsic value of stock B will be the same as the intrinsic value of stock B will be less than the intrinsic value of stock B more information is necessary to answer this question

16. You put up $50 at the beginning of the year for an investment. The value of the investment grows 4% and you receive a dividend of $3.50. Assuming there was 2.5% inflation during the year, your inflation-adjusted or real Holding Period Return was _____ (Points : 2)

4.5% 6.0% 7.75% 8.5% 9.25%

17. XYZ stock's current earnings per share are $2.50 and are projected to grow 12% over the next 12-months. Typically, XYZ's price earnings multiple trades at about 80% of its growth rate. What is the target or expected price of XYZ 12-months hence? (Points : 2)

$28.24 $28.48 $26.88 $30.64 $29.74

Question 18.18. If the internal growth rate = 18% and the return on equity = 24%, the implied earnings retention rate is: (Points : 2)

80% 85% 75% 65% 90%

Question 19.19. If an investors buys 200 shares of FYI and has an initial margin requirement of 60%, and the total value of the purchase is $8000, what is the implied purchase price of FYI and the dollar amount of the initial margin requirement? (Points : 2)

Purchase price of FYI = $60 Dollar amount of initial margin requirement = $4000 Purchase price of FYI = $40 Dollar amount of initial margin requirement = $4800 Purchase price of FYI = $60 Dollar amount of initial margin requirement = $3200 Purchase price of FYI = $60 Dollar amount of initial margin requirement = $6400 Purchase price of FYI = $40 Dollar amount of initial margin requirement = $5600

Question 20.20. If an investors buys 200 shares of FYI and has an initial margin requirement of 60%, and the total value of the purchase is $8000, what is the dollar amount of the margin loan? (Points : 2)

$4200 $4800 $5400 $3200 $3600

Question 21.21. If a taxable yield for a given investment is 9.25%, and the investor faces a marginal tax rate of 20%, what is the equivalent yield on a tax-free investment? (Points : 2)

8.4% 7.4% 7.5% 8.25% 7.75%

23. The value of a bond is a function of: I. Interest payments II. Par or maturity value of principal III. Required rate of return IV. Time to maturity (Points : 1)

I and III II and III I, II, III and IV I, III and IV II, III and IV

Question 24.24. A