Question 1If you receive $1,613 at the end of each year for the first three years and $9,578 at theend of each year for the next three years. What is the net present value of this cash flowstream? Assume interest rate is 13.8%.Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma inthe answer box. For example, if your answer is $12.345 then enter as 12.35 in theanswer box.Answer1 pointsQuestion 2Suppose a stock had an initial price of $16.3 per share, paid a dividend of $1.8 pershare during the year, and had an ending share price of $20.3. What are the percentagereturns if you own 84 shares?Note: Enter your answer in percentages rounded off to two decimal points. Do not enter$ or comma in the answer box. For example, if your answer is $12.345 then enter as12.35 in the answer box.Answer1 pointsQuestion 3You have observed the following returns on ABC’s stocks over the last six years:7.3%, 15.6%, 3.9%, -2.5%, 6.4%, -5.1% What is the geometric average returns on thestock over this six-year period.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter% in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in theanswer box.Answer1 pointsQuestion 4You have a portfolio of two risky stocks which turns out to have no diversificationbenefit. The reason you have no diversification is the returns:Answerare completely unrelated to one another.are too large to offset.move perfectly with one another.are too small.move perfectly opposite of one another.1 pointsQuestion 5A stock just paid a dividend of D0 = $2.5. The required rate of return is rs = 13%, andthe constant growth rate is g = 4.4%. What is the current stock price?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma inthe answer box. For example, if your answer is $12.345 then enter as 12.35 in theanswer box.Answer1 pointsQuestion 6The principal amount of a bond that is repaid at the end of term is called the par value or the:Answerback-end valueperpetuity valuecall premiumcoupon valueface value1 pointsQuestion 7The ABC Company has a cost of equity of 9.7 percent, a pre-tax cost of debt of 6.6percent, and a tax rate of 29 percent. What is the firmâs weighted average cost of capitalif the weight of debt is 69 percent?Note: Enter your answer rounded off to two decimal points. Do not enter % in theanswer box. For example, if your answer is 0.12345 then enter as 12.35 in the answerbox.Answer1 pointsQuestion 8You want to create a portfolio as risky as the market. Suppose you invest your money inStocks A, B, C, and the risk-free asset. Compute your investment in Stock C (i.e. solvefor weight of Stock C)?Stock Weights BetaA111.3B140.6C?1.7Rf??Note: Enter your answer rounded off to two decimal points. Do not enter % in theanswer box. For example, if your answer is 0.12345 then enter as 12.35 in the answerbox.Answer1 pointsQuestion 9A bond that sells for less than face value is called as:Answerpremium bonddebentureperpetuitypar value bonddiscount bond1 pointsQuestion 10You have observed the following returns on ABC’s stocks over the last five years:20.7%, 12.8%, -5%, 12.5%, 9.9%What is the arithmetic average returns on the stock over this five-year period.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter% in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in theanswer box.Answer1 pointsQuestion 11The risk-free rate is 6.7%, the market risk premium is 6.7%, andthe stockâs beta is 0.65. What is the cost of common stock (Ke)?Note: Enter your answer rounded off to two decimal points. Do not enter % in theanswer box. For example, if your answer is 0.12345 then enter as 12.35 in the answerbox.Answer1 pointsQuestion 12The nominal rate is 18.2% compounded monthly. Compute the effective rate.Note: Enter your answer rounded off to two decimal points. Do not enter % in theanswer box. For example, if your answer is 0.12345 then enter as 12.35 in the answerbox.Answer1 pointsQuestion 13Suppose that today’s stock price is $59.1. If the required rate on equity is 16.9% and thegrowth rate is 3.9%, compute the expected dividend (i.e. compute D1)Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma inthe answer box. For example, if your answer is $12.345 then enter as 12.35 in theanswer box.Answer1 pointsQuestion 14You would like to create a portfolio that is equally invested in a risk-free asset and two stocks.One stock has a beta of 1.53. What does the beta of the second stock have to be if you want theportfolio to have a beta of 0.67?Enter your answer rounded off to two decimal points.Answer1 pointsQuestion 15The beta of the risk-free asset is:Answer011.521 pointsQuestion 16How many years will it take for your money to grow from $522 to $735 at 5%compounded semi-annually?Answer1 pointsQuestion 17If the market value of debt is $137,015, market value of preferred stock is $54,507, andmarket value of common equity is 103,045, what is the weight of preferred stock?Note: Enter your answer rounded off to two decimal points. Do not enter % in theanswer box. For example, if your answer is 0.12345 then enter as 12.35 in the answerbox.Answer1 pointsQuestion 18The square-root of the variance is:Answerbetacorrelation coefficientstandard deviationhalf-variancecovariance1 pointsQuestion 19ABC Company’s last dividend was $3.1. The dividend growth rate is expected to beconstant at 8% for 3 years, after which dividends are expected to grow at a rate of 3%forever. The firm’s required return (rs) is 15%. What is its current stock price (i.e.solve for Po)?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma inthe answer box. For example, if your answer is $12.345 then enter as 12.35 in theanswer box.Answer1 pointsQuestion 20What is the future value of $377 at 19% after 7 years?Enter your answer rounded off to two decimal points. Do not enter $ or comma in theanswer box.Answer1 pointsQuestion 21ABC companyâs market value of common stock is $200 million, preferred stock is $300 million,and debt is $500 million. Suppose that the cost of equity is 7%, the before-tax cost of debt is4.3%, cost of preferred stock is 6%, and the tax rate is 35%.Compute the WACC.Note: Enter your answer rounded off to two decimal points. Do not enter % in theanswer box. For example, if your answer is 0.12345 then enter as 12.35 in the answerbox.Answer1 pointsQuestion 22The common stock of ABC Industries is valued at $55.5 a share. The companyincreases their dividend by 3.8 percent annually and expects their next dividend to be$2.85. What is the required rate of return on this stock?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answerbox. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.Answer1 pointsQuestion 23ABCâs last dividend paid was $0.8, its required return is 14%, its growth rate is 8%, and itsgrowth rate is expected to be constant in the future. What is ABC’s expected stock price in 15years?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma inthe answer box. For example, if your answer is $12.345 then enter as 12.35 in theanswer box.Answer1 pointsQuestion 24Suppose the real rate is 7.16% and the inflation rate is 3.61%. Solve for the nominalrate.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter% in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in theanswer box.Answer1 pointsQuestion 25The ABC Co. has $1,000 face value stock outstanding with a market price of $1,094.2.The stock pays interest annually, matures in 10 years, and has a yield to maturity of 9.7percent. What is the annual coupon amount?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answerbox. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.Answer1 pointsQuestion 26If the coupon rate is greater than the yield to maturity, the bond will:Answersell at a premiumsell at parsell at a discount1 pointsQuestion 27ABC Inc. issued sixteen-year, 6 percent semi-annual coupon bonds at par. Today, the bonds arepriced at $1012. What is the firmâs after-tax cost of debt if the tax rate is 30%?Note: Enter your answer rounded off to two decimal points. Do not enter % in theanswer box. For example, if your answer is 0.12345 then enter as 12.35 in the answerbox.Answer1 pointsQuestion 28An investor puts $200,000 in a risk-free asset and $100,000 in the market portfolio.Compute the beta of his portfolio.Answer0.670.500.3321

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