**Please chose the correct answer for each question ( no need for explanation of the answer)

1. A preferred stock has a par value of BHD 40, pays a 5% dividend. The required rate of return is 15%. What is this stock worth to you?

1. 19.27
2. 13.33
3. 7.85

	Probability	Asset A (%)	Asset B (%)
Good	0.45	8.00	15.00
Moderate	0.30	4.00	8.00
Poor	0.25	1.50	-5.00

2) Using the data above, what is the variance of asset A?

a-7.38

b-4.52 c- 6.11

3) Consider a firm that just paid a dividend of BD2.50. They plan to increase dividends by 4% in the first three years and 8% in year four per year thereafter. The required rate of return is 10%. What is the value of the stock?

a-130.44

b-120.80

c-125.78

4)

A	B	C	Correlation AB	0.9
Price	15	8	6	Correlation BC	0.7
Return	12%	6%	4%	Correlation AC	0.6
Standard Deviation	0.45	0.24	0.15

Using the data above, what is the portfolio variance?

a-0.25

b-0.42 c-0.16

5) The BD 2,500 face value bond has a coupon rate of 5%, with interest paid semi-annually, and matures in 8 years. If the bond is priced to yield 10%, what is the bond's value today?

a-1,822.64

b-1,200.67

c-1,568.15

6)

Stock	Cost	Beta	Yearly Income	Value Today
A	20	1.15	2	27
B	45	2	8	40
C	32	1.25	6	45

Using the data above, what is the rate of return for stock C?

a-40%

b-25%

c-35%