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please see the attached file . I need the answer for the questions with ONE hour 1-Suppose you invest equal amounts in a portfolio with
please see the attached file . I need the answer for the questions with ONE hour
1-Suppose you invest equal amounts in a portfolio with an expected return of 16% and a standard deviation of returns of 20% and a risk-free asset with an interest rate of 4%; calculate the expected return on the resulting portfolio: A.10% B.4% C.12% D.none of the above 2-The unique risk is also called the: A.Unsystematic risk B.Diversifiable risk C.Firm specific risk D.All of the above 3-State the "rate of return rule." 4-Present Value is defined as: A.Future cash flows discounted to the present at an appropriate discount rate B.Inverse of future cash flows C.Present cash flow compounded into the future D.None of the above 5-Generally, postaudits are conducted for large projects: A.shortly after the completion of the project B.after several years after the completion of the project C.shortly after the project has begun to operate D.well before the start of the project 6-As a legal entity a corporation can perform the following functions except: I) borrow money; II) lend money; III) sue and be sued; IV) vote A.I and II only B.I, II, and III only C.IV only D.I, II, III and IV 7-The following are drawbacks of sensitivity analysis except: A.it provides ambiguous results. B.underlying variables are likely to be interrelated. C.it provides additional information about the project that is useful. D.all of the above statements are drawbacks of sensitivity analysis. 8-Major disadvantages of the Sarbanes-Oxley Act of 2002 (SOX) are the following except: A.good investor protection B.increase in compliance costs C.that it constrains managers' ability to run the firm D.that it may discourage development of human capital in the firm 9-Internal rate of return (IRR) method is also called: A.Discounted payback period method B.Discounted cash-flow (DCF) rate of return method C.Modified internal rate of return (MIRR) method D.None of the above 10-Which of the following investment rules has value adding-up property? A.The payback period method B.Net present value method C.The book rate of return method D.The internal rate of return method 11-The mixture of debt and equity, used to finance a corporation is also known as: A.Capital budgeting B.Capital structure C.Investing D.Treasury 12-The term structure of interest rates can be described as the: A.Relationship between the spot interest rates and the bond prices B.Relationship between spot interest rates and stock prices C.Relationship between spot interest rates and maturity of a bond D.None of the above 13-The cost of a resource that may be relevant to an investment decision even when no cash changes hand is called a (an): A.Sunk cost B.Opportunity cost C.Working capital D.None of the above 14-What is the relationship between interest rates and bond prices? 15-When a firm has the opportunity to add a project that will utilize excess factory capacity (that is currently not being used), which costs should be used to determine if the added project should be undertaken? A.Opportunity cost B.Sunk cost C.Incremental costs D.None of the above 16-Which of the following portfolios have the least risk? A.A portfolio of Treasury bills B.A portfolio of long-term United States Government bonds C.Portfolio of U.S. common stocks of small firms D.None of the above 17-If the average annual rate of return for common stocks is 11.7%, and for treasury bills it is 4.0%, what is the market risk premium? A.15.8% B.4.1% C.7.7% D.None of the above 18-Company X has a P/E ratio of 10 and a stock price of $50 per share. Calculate earnings per share of the company. A.$6 per share B.$10 per share C.$0.20 per share D.$5 per share 19-If the discount rate is stated in nominal terms, then in order to calculate the NPV in a consistent manner requires that project: I) cash flows be estimated in nominal terms II) cash flows be estimated in real terms III) accounting income be used A.I only B.II only C.III only D.None of the above 20-Which of the following type of projects has average risk? A.Speculation ventures B.New products C.Expansion of existing business D.Cost improvement 21-An annuity is defined as A.Equal cash flows at equal intervals of time for a specified period of time B.Equal cash flows at equal intervals of time forever C.Unequal cash flows at equal intervals of time forever D.None of the above 22-Using the company cost of capital to evaluate a project is: I) Always correct II) Always incorrect III) Correct for projects that are about as risky as the average of the firm's other assets A.I only B.II only C.III only D.I and III only 23-The market value of XYZ Corporation's common stock is 40 million and the market value of the risk-free debt is 60 million. The beta of the company's common stock is 0.8, and the expected market risk premium is 10%. If the Treasury bill rate is 6%, what is the firm's cost of capital? (Assume no taxes.) A.9.2% 24-Briefly explain the term "risk-free rate of interest" B.14% C.8.1% D.None of the aboveStep by Step Solution
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