Check Attached file and solve these questions about Finance.

Introduction to Finance 1. Suppose you invest equal amounts in a portfolio with an expected return of 16% and a standard deviation of 18 and a risk-free asset with an interest rate of 4%. Calculate the expected return on the resulting portfolio. A. B. C. D. 10% 4% 12% 9% 2. Assume the same facts as in #1. What is the standard deviation of the combined portfolio? Assume perfect correlation. A. B. C. D. 8% 10% 20% 9% 3. The correlation coefficient measures the: A. B. C. D. The rate of return of individual stocks Direction of movement of the return of individual stocks Degree to which the returns of two stocks move together Degree of unique risk present in the standard deviations of a pair of stocks 4. The stock's beta measures: A. B. C. D. The stock's covariance with the risk-free rate The change in the stock's return for a given change in the market return The return on the stock The standard deviation on the stock's return. 5. An investment portfolio that offers the highest possible return for a given level of investment is considered: A. B. C. D. Aggressive Growth Oriented Efficient Liquid 6. The Sharpe Ratio is reports the relationship between: A. B. C. D. Risk Premium to Standard Deviation Variance to Standard Deviation Overall Return to the Risk-Free rate of Return Beta to Standard Deviation 7. A well-diversified portfolio will most probably include which of the following: A. B. C. D. Stocks of companies in the financial services business Stocks that have a Sharp ratio less than 1 (one) Perfectly correlated stocks Some stocks with betas greater than 1 (one) and some with a beta less than 1 (one) 8. The Market Risk Premium (MRP) is the difference between the market return and the risk-free rate of return. Since 1900 the MRP has averaged between: A. B. C. D. 0% and 2.0% 2.0% and 4.0% 4.0% and 6.0% 6.0% and 8.0% 9. Value stocks are defined as: A. B. C. D. Stocks with a long history of regular dividend payments Stocks with a high ratio of book value to market value Stocks that are priced below $1.00/share. Stocks with a high ratio of market value to book value. 10. Which of the following statements is true? A. B. C. D. The cost of equity is always greater than the cost of debt Dividends are tax deductible thereby reducing the cost of equity The cost of debt is always greater than the cost of equity Stockholder's Equity (on a Balance Sheet) is always greater than zero. 11. The Fama-French Three Factor Model expands upon the Capital Asset Pricing Model by offering two factors to consider beyond beta in estimated a return on investment. Those two factors are: A. B. C. D. Seasonal concerns and dividend payment history C Suite turnover and market capitalization Standard Deviation and Variance Market capitalization and value (high book to market ratios) 12. If you chose to graph market return on the x axis and specific company return on the y axis, the slope of the line connecting the related points would be: A. B. C. D. Always less than one The square root of the variance Beta The standard error 13. When calculating the Weighted Average Cost of Capital (WACC) you should: A. Ignore any borrowings because overall debt is irrelevant when determining return on equity. B. Consider the income tax impact of interest expense because interest is an allowable tax deduction C. Consider interest expense but ignore the income tax impact because EBITDA is calculated BEFORE interest D. Ignore current borrowing costs and consider only the risk-free interest rate. 14. Variance and Standard Deviation are both measurements of risk and/or volatility. What is the mathematical relationship between the two? A. B. C. D. Standard deviation is the square root of the variance Variance is the square root of the standard deviation The combination of the two provides the coefficient correlation There is no direct relationship between the two 15. The term \"Random Walk\" is used to describe: A. The fragmented nature of Wall Street in New York City B. The fact that stock price changes are independent of each other C. The fact that significant stock activity is normally restricted to the middle of the trading day and less so to the beginning and end D. The fact that significant stock activity usually involves trading on margin and is therefore subject to the random nature of interest rates. 16. There are three forms of Market Efficiency. The strongest level indicates that: A. Stock prices reflect all historical information B. Stock prices reflect historical information and all publicly available information C. Stock prices reflect all information that can be acquired by painstaking analysis of the company and the economy D. The open nature of capitalism will eliminate the possibility of anomalies in the overall performance of the market. 17. In the time leading up to a merger announcement, the stock price of the target company will: A. B. C. D. Usually decline as investors anticipate significant changes in the cost structure. Remain flat as investors \"sit on the sidelines\" waiting for resolution Follow the random walk theory Usually gradually move upwards as investors anticipate a premium to be paid on the purchase. 18. During this century, the stock market has experienced two significant bubbles. Those bubbles were related initially to: A. B. C. D. High Tech stocks and transportation stocks Devaluation of the Chinese yen Russian default on loan payments Internet stocks and real estate. 19. The sub-prime mortgage crisis was a result of: A. Relaxed standards on lending designed to facilitate the purchase of homes by lower income citizens. B. More exotic investment vehicles that encouraged mortgage brokers to process more mortgages. C. A conflict of interests with bond rating agencies that prompted the provision of favorable ratings on sub-standard investment vehicles. D. All the above E. None of the above 20. The constant dividend growth model attempts to determine the fair price for a share of stock. The bubbles and aberrations that the market has experienced over the last 50 years have illustrated that a small variance in one specific component of that formula will yield substantially different results in the share price. That component is: A. B. C. D. Total dividends paid Risk free rate of interest Beta Dividend growth rate