saint mba570 module 6 quiz

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1.
Which of the following investments had the largest fluctuations overall return over the past eighty years?
(Points : 10)




Question 2.
2.
Which of the following statements is false?
(Points : 10)





Question 3.
3.
Bank A has 1,000 loans outstanding each for $100,000, that it
expects to be fully repaid today. Each of Bank A’s loans has a 6%
probability of default, in which case the bank will receive $0 for each
of the defaulting loans. The chance of default is independent across all
the loans. The expected overall payoff to Bank A is __________.
(Points : 10)





Question 4.
4.
Which of the following statements is false?
(Points : 10)





Question 5.
5.
If the market risk premium is 7%, the risk-free rate is 4%
and IBM’s beta is 0.73, then the expected return of investing in IBM is
closest to __________.
(Points : 10)





Question 6.
6.
Suppose that in the coming year, you expect Exxon-Mobil stock
to have a volatility of 42% and a beta of 0.9, and Merck’s stock to
have a volatility of 24% and a beta of 1.1. The risk-free interest rate
is 4% and the markets expected return is 12%. Which stock has the
highest total risk?
(Points : 10)





Question 7.
7.
Boeing (BA) has 697.5 million shares outstanding and a market
capitalization of $38.223 billion. Boeing’s stock price is closest to
__________.
(Points : 10)





Question 8.
8.
Which of the following statements is false?
(Points : 10)





Question 9.
9.
Which of the following is true of asset betas?
(Points : 10)





Question 10.
10.
The risk-free rate of interest is 3% and the market risk
premium is 5%. Alpha Company’s hardware division has an asset beta of
1.4, a free cash flow of $450 million, and an expected growth rate of
4.0%. The value of the hardware division (in $millions) is closest to
__________.
(Points : 10)





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