Portfolio weight 0.2 LV. V. VE 18. You've assembled the following portfolio: Stock Expected return Beta 0.085 0.075 0.04 What is the beta of the portfolio? A. 0.075 B. 0.75 1.0 D. 1.1 19. About capital budgeting methods, which statement is NOT correct? A. A shorter payback period is preferred over a longer payback period B. If the IRR exceeds the required return, the profitability index will be greater than 1.0 The net present value is computed using IRR. D. If a project generates a return that is equal to the hurdle rate, the project's NPV will be zero. 20. Which of the following statement about risk is NOT correct? A. Diversifiable risk, asset-specific risk and unique risk are synonyms to unsystematic risk (BDecrease in corporate tax rates is an example of systematic risk C. higher total risk is compensated with higher average (expected) return D. A firm's warehouse fire is an example of unsystematic risk 21. A $1,000 face value bond currently has a yield to maturity of 6.69 percent. The bond matures in three years and pays interest annually. The coupon rate is 7 percent. What is the current price of this bond? Ev a A. $949.60 B. $1,005.26 C. $1,008.18 D. $1,010.13 JI4669 22. Which statement about the term structure of interest rates is NOT correct? A. plots spot rates as a function of maturities PM -70 B. usually is upward sloping, but can take many shapes from time to time C. is humped when intermediate-term pure discount bonds have a lower return than either the shorter-term or longer-term bonds D. is flat if all spot rates are the same. 23. A 5.5% coupon, semiannual-pay, five-year bond has a yield to maturity of 6.80%. Over the next year, if the bond's yield to maturity remains unchanged, its price will: A.)increase. B. decrease. C. remain unchanged. D. not enough information to determine 0 $963.33 24. A 3-year coupon bond, issued at $946.54, pays annual coupon and has a face value of $1000. Use the standard amortization table below to answer questions 13-1 to 13-3 Period Coupon Interest Revenue Balance Addition Carrying Balance N:3 $946.54 1 $40.00 ? $16.79 $40.00 $57.80 Cell E4 3 $40.00 $58.87 $1,000.00 114=? 11- 24-1. What is the YTM of this bond when issued? C.40 A. 3% B.4% C.5% (0.6% E.7% 2 Page Ovq4654 FV-1000 2