UMUC FIN 610 Final Exam Part 1 with Answers
UMUC FIN 610 Final Exam Part 1 with Answers
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FIN 610 Final Exam Part 1 Answers (UMUC)
1. In the CAPM model:
2. The Security Market Line is
3. The operating cycle for a firm is defined as:
4. A stock DEF has the following payoffs probabilities:
Probability
|
0.2
|
0.5
|
0.3
|
Payoff
|
$100
|
$170
|
$200
|
5. What is the Expected Payoff to the stock?
6. During a 3-months period, the price index increases from 120.8 to 121.4. During the same period, a stock increases in price for $100 to $114.5. What is the real rate of return for the stock for the 3 month period?
7. A stock has a beta of 2.8, the market expected return is 8% and the riskfree rate is 2%. What is the expected rate of return according to CAPM?
8. Suppose the covariance between the returns of the stock GHI and the returns to the market is 0.00059 and the standard deviation of market returns is 0.033. What is the beta of the stock? (Note: Here the actual numbers rather than percentages are given. So give your answer as an actual number rather than a percentage etc.)
9. An asset like gold is used by investors to provide a hedge against market movements. That is, when the market starts falling, gold prices increase as investors move money from stocks to gold. We would therefore expect beta to be:
10. An asset like gold is used by investors to provide a hedge against market movements. That is, when the market starts falling, gold prices increase as investors move money from stocks to gold. If CAPM is true, we would therefore expect the expected return to gold to be:
11. A firm has:
Amount ($ millions)
| |
Cash
|
50
|
Other Current Assets
|
114
|
Current Liabilities
|
62
|
12. What is its Net Working Capital?
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