Fin Study Guide

Only available on StudyMode
  • Download(s) : 5
  • Published : March 24, 2013
Open Document
Text Preview
Quiz 1- Spring 2013

Group 1
1.Which of the following concerning the relationship between risk and return is correct? A.Investors do not need to be compensated for taking on risk. B.Investors generally demand higher return for lower risk investments. C.Safer investments tend to have lower returns.

D.Higher risk investments provide lower returns.
E.Risk and return are not related.

2.Which of the following concerning the relationship between risk and return is correct? A.Risk and return are inversely related.
B.Investors generally require a higher return as they take on more risk. C.Safer investments tend to have higher returns.
D.Higher risk investments historically provided lower returns. E.Investors do not need to be compensated for taking on risk.

Group 2
3.Calculate the stock return from the following information. Beginning Price: $50.00
Price 1 Year Later: $63.75
Annual dividend: $2.25
A.5.45%
B.25.1%
C.27.5%
D.32.0%
E.-23.0%

4.Calculate the stock return from the following information. Beginning Price: $83.75
Ending Price: $72.50
Annual dividend: $5.25
A.-8.3%
B.19.7%
C.15.5%
D.-7.2%
E.-13.4%

Group 3
5. Which of the following portfolios is the most risky?
A.Small company stocks
B.Corporate bonds
C.Treasury bonds
D.Large company stocks
E.Savings account

6. Which of the following portfolios is the least risky?
A.Small company stocks
B.Corporate bonds
C.Treasury bonds
D.Large company stocks
E.Commodity futures

Group 4
7.Which of the following is part of the treasurer's function? A.Auditing the company’s financials
B.Publishing financial statements
C.Making capital expenditures
D.Monitoring accounting systems
E.Filing the company’s taxes

8.Which of the following is part of the controller’s function? A.Determining the feasibility of various projects
B.Financial planning
C.Managing short and long term capital requirements
D.Working capital management
E.Preparing financial statements and reports

Group 5
9.According to the Theory of Efficient Capital Markets:
A.Stock prices are not affected by new information
B.Current stock prices reflect all publicly available information C.Stock prices adjust to new information slowly over time
D.Stock prices only react instantly to positive financial information E.Investors can easily beat the market

10. According to the Theory of Efficient Capital Markets:
A. Stock prices do not reflect all publicly available information B. Stock prices take a long time to capture new information C. Stock prices react instantaneously to new information
D. Stock prices react positively to all new information
E. Investors can easily predict exact stock prices

Group 6
11.Given the following information, an investor would most likely invest in which stock? Stock A: Mean Return – 15%; Standard Deviation – 20%
Stock B: Mean Return – 15%; Standard Deviation – 5%

A.Stock A because it is riskier than Stock B
B.Stock A because it is not as risky as Stock B
C. Stock B because it is riskier than Stock A
D.Stock B because it is not as risky as Stock A
E.No difference because they have the same rate of return

12.Given the following information, an investor would most likely invest in which stock? Stock A: Mean Return – 7%; Standard Deviation – 9%
Stock B: Mean Return – 7%; Standard Deviation – 13%

A.Stock A because it is riskier than Stock B
B.Stock A because it is not as risky as Stock B
C. Stock B because it is riskier than Stock A
D.Stock B because it is not as risky as Stock A
E.No difference because they have the same rate of return

Group 7
13. Which of the following statements about Business Organizational Forms is true? A. Corporations are less difficult to start than partnerships B. Transfer of ownership is more difficult for corporations than for sole proprietorships C. Raising...
tracking img