Mid Term Securities Analysis
These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below.  Date Taken:  5/25/2012 Time Spent: 2 h , 45 secs 
Points Received: 161 / 210 (76.7%) 

Question Type: # Of Questions: # Correct:
Multiple Choice 8 7
Essay 5 N/A


Grade Details
1. Question : (TCO D) Find the current dividend on a stock, given that the required return is 8 percent, the dividend growth rate is 5 percent, and the stock price is $50 per share.

 Student Answer: $1.75 
  $2.00 
  $1.25 
  $1.43 


 Comments: 


2. Question : (TCO D) Find the next dividend on a stock given that the required return is 9.78 percent, the dividend growth rate is 7.77 percent, and the stock price is $94.89 per share.

 Student Answer: $2.91 
  $0.91 
  $1.91 
  $1.71 


 Comments: 


3. Question : (TCO D) A company has current assets of: cash $500, accounts receivable $200, and inventory $400. The company also has current liabilities of: accounts payable $300 and notes payable $600. What is the company's quick ratio?

 Student Answer: .78 
  .88 
  .90 
  .55 


 Comments: 


4. Question : (TCO B) Behavioralists point out that even if market prices are ____________ there may be _______________.

 Student Answer: distorted; limited arbitrage opportunities    distorted; fundamental efficiency 
  allocationally efficient; limitless arbitrage opportunities    distorted; allocational efficiency 


 Comments: 


5. Question : (TCO B) The ratio of the average yield on 10 toprated corporate bonds, to the average yield on 10 intermediategrade bonds is called the __________.

 Student Answer: bond price index 
  confidence index 
  relative strength index 
  trin ratio 


 Comments: 


6. Question : (TCO A) ____ is not a derivative security.

 Student Answer: A share of common stock 
  A call option 
  A futures contract 
  All of the above are derivative securities. 


 Comments: 


7. Question : (TCO A) The maximum maturity on commercial paper is

 Student Answer: 270 days 
  180 days 
  90 days 
  30 days 


 Comments: 


8. Question : (TCO A) You can tax shelter only onehalf of your retirement savings. You want to invest onehalf of your savings in bonds and onehalf in stocks. How much of the bonds and how much of the stocks should you allocate to the tax sheltered investment?

 Student Answer: Stock and bond investments should be equally invested in both tax sheltered and nonsheltered accounts.    You should place all the stocks in tax sheltered accounts and all the bonds in nonsheltered accounts.    You should place all the bonds in tax sheltered accounts, and all the stocks in nonsheltered accounts.    It makes no difference how you allocate your stock and bond investments among tax sheltered and nonsheltered accounts.  

 Comments: 


9. Question : (TCO I) CAPM is one of the more popular models for determining the risk premium on a stock. If the Expected Return on the Stock is 20.38 percent, the RiskFree Rate is 9.0 percent, and the Beta for Stock i is 1.75. Find the Expected Return on the market using the CAPM model. Show your work.

 Student Answer:  rs=rRF+(RPm)b .2038=.09+(RPm)*1.75 .2038.09/1.75=(RPm) .0650=RPm The Expected Return on the market using the CAPM model is 6.50%  

 Comments: (20.389)/1.75 + 9 = 15.5% Chapter 7...
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