FINS1613

Topics: Weighted average cost of capital, Stock, Standard deviation, Arithmetic mean, Variance / Pages: 8 (1295 words) / Published: Jun 15th, 2015
Australian School Of Business
FINS1613: Business Finance
Semester 1 2013
Tutorial Quiz 4

Name:
STUDENT NAME
Student number: STUDENT NUMBER
Tutorial:

TUTORIAL

Instructions:
1. You must complete a Generalised Answer Sheet for this exam.
(a) Complete the top portion of the sheet, providing your family name, initials, and student number.
(b) If you are taking a quiz marked Extra, record the quiz number under
Other Data. If you are taking a quiz preprinted with your student information, leave Other Data blank.
(c) Answer all questions using the generalised answer sheet. Clearly fill in the response oval using a 2B pencil.
2. You must not retain any part of this examination document. All examination materials including this document must be submitted at the completion of the examination, otherwise your exam will not be marked.
3. All exams are unique and linked to your student number. Sign below to confirm that your name and student number listed above are correct.
Signature:

Information:
1. Time allowed: 20 minutes
2. Grading:
(a) Total marks available: 100 marks
(b) This examination paper consists of 6 (six) multiple choice questions worth 16 (sixteen) marks each.
(c) Correctly recording your student ID on the generalised answer sheet is worth 4 (four) marks.
(d) All questions are graded on a correct/incorrect basis. There is no penalty for answering a question incorrectly.
3. Unless otherwise specified, each question is independent of the others and assumptions from one question do not carry over to the others.
4. Use of a calculator is allowed.
5. Some useful equations are printed below.
(a) Standard deviation: n (ri − r¯)2 i=1 σ(r) =

n−1

(b) Variance of a portfolio: σ 2 = w12 σ12 + w22 σ22 + 2w1 w2 σ1 σ2 cov(R1 , R2 )
= w12 σ12 + w22 σ22 + 2w1 w2 σ1 σ2 ρ1,2

(c) Weighted average cost of capital:
W ACC = ke ×

D
E
+ kd (1 − t) ×
V
V

GOOD LUCK!

Q UESTIONS 1 AND 2 (16 MARKS EACH )
1. Inflation, recession, and high interest rates are economic events that are

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