Practice Quiz 2_ Principles of Finance (M)
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The University of Adelaide *
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Course
CORPFIN 70
Subject
Finance
Date
Apr 3, 2024
Type
Pages
18
Uploaded by SuperHumanFieldBarracuda26
01/07/2023, 15:21
Practice Quiz 2: Principles of Finance (M)
https://myuni.adelaide.edu.au/courses/82892/quizzes/157123
1/18
Practice Quiz 2
Due
No due date
Points
61
Questions
25
Time limit
None
Allowed attempts
Unlimited
Instructions
Attempt history
Attempt
Time
Score
LATEST
Attempt 1
24 minutes
25 out of 61
Submitted 1 Jul at 15:20
This is an open book quiz. Answer all questions.
MCQs :Choose the response that is correct or that best answers the question.
Short answer questions : Type your answers in answer boxes provided
Take the quiz again
1 / 1 pts
Question 1
Which of the following is not an example of unsystematic risk?
A legal suit against a company for environmental pollution Changes in the level of interest rates Correct!
Correct!
The development of a new product line The chief executive officer resigns
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Practice Quiz 2: Principles of Finance (M)
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2/18
0 / 1 pts
Question 2
Beta is a measure of the extent to which:
the returns on the stock market as a whole change over time. a security's risk can be eliminated by proper diversification.
ou Answered
ou Answered
a security's risk can be eliminated by random diversification.
the returns on a given stock move with the stock market. orrect answer
orrect answer
1 / 1 pts
Question 3
A portfolio with a level of systematic risk the same as that of the market
has a beta that is
equal to one. Correct!
Correct!
less than zero. less than the beta of the risk-free asset. equal to zero. Correct answer: b
Learning Objective 5.6 ~ discuss which type of risk matters to
investors and why (Basic)
0 / 1 pts
Question 4
Which of the following statements is true?
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Practice Quiz 2: Principles of Finance (M)
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3/18
Adding a riskless security to a portfolio will increase its overall risk. The amount of risk reduction that can be achieved by adding a new
security to an existing portfolio increases as the correlation between the
expected returns of the new security and the expected returns on the
existing portfolio increases.
Adding an asset to a portfolio by random selection will reduce the risk of
a portfolio.
orrect answer
orrect answer
Two assets that are perfectly negatively correlated can produce a
portfolio with zero variance.
ou Answered
ou Answered
1 / 1 pts
Question 5
Which of the following statements is correct?
Unsystematic risk is compensated for by the risk premium. Unsystematic and systematic risks are compensated for by the risk
premium.
Systematic risk is compensated for by the risk premium Correct!
Correct!
Unsystematic risk is measured by standard deviation of portfolio’s
returns.
1 / 1 pts
Question 6
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01/07/2023, 15:21
Practice Quiz 2: Principles of Finance (M)
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4/18
A security market line:
is a graphical representation of the Capital Asset Pricing Model. Correct!
Correct!
explains the covariance between the returns on the risky asset and the
market portfolio.
explains the covariance between the returns on the risky asset and a
riskless asset.
is a graphical representation of the CML. 0 / 1 pts
Question 7
If you were to compare the returns of an individual share to a market
index, select the answer below that is most true.
None of the options listed. The returns of the individual share will show less variability than those
of the market index if they have the same beta.
ou Answered
ou Answered
The returns of the individual share will show more variability than those
of the market index if they have the same beta
The returns of the individual share will show the same level of variability
than those of the market index, if they have the same beta.
orrect answer
orrect answer
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5/18
0 / 1 pts
Question 8
The risk-free rate is expected to remain at current level in the coming
years, while the market risk premium (R
- R
), is expected to
increase. Based on this forecast, which of the following statements is
correct?
M
F
The required return for all shares will increase by the same amount. The required return will increase for all shares with positive betas, but
will increase less for shares with higher betas.
The required return will increase for shares with a beta less than 1.0
and will decrease for shares with a beta greater than 1.0.
ou Answered
ou Answered
The required return will increase for all shares with positive betas, but
will increase more for shares with higher betas.
orrect answer
orrect answer
0 / 2 pts
Question 9
PoF Insurance Company has made an investment in another company
that will guarantee it a cash flow of $30,000 each year for the next 12
years. The cash flows occur at the end of each year. If the company
uses a discount rate of 5.12 per cent on its investments, what is the
present value of this investment?
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
289,804.69
ou Answered
ou Answered
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264,107.1 margin of error +/- 2%
orrect answer
orrect answer
This question is related to the section of present value of an
ordinary annuity. With the formula of: 2 / 2 pts
Question 10
Shares A, B, and C have expected returns of 12.28 percent, 17.86
percent, and 29.55 percent, respectively, while their standard
deviations are 49.07 percent, 31.75 percent, and 26.63 percent,
respectively. If you were considering the purchase of each of these
shares as the only holding in your portfolio, what is the coefficent of
variation of the most favourable share to include?
(Round all answers to 2 decimal places, i.e., 2.35)
Coefficent of variation, CV = 0.9
Correct!
Correct!
0.9 margin of error +/- 2%
orrect answer
orrect answer
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01/07/2023, 15:21
Practice Quiz 2: Principles of Finance (M)
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7/18
This question is related to the section of: Single-asset
portfolios. Since the holding will be made in a completely undiversified
portfolio, then we can calculate the risk per unit of return for
each share, the coefficient of variation, and choose the share
with the lowest value. With the formula of: a= Standard deviation b=expected return 2 / 2 pts
Question 11
Ahmet purchased a share for $117 one year ago. The share is now
worth $171. During the year, the share paid a dividend of $8. What is
the total return to Ahmet from owning the share?
Round your answer to 2 decimal places. E.g. if the interest rate is
5.8312%, please type 5.83 in the answer box (do not type the
percentage sign).
52.99
Correct!
Correct!
52.99 margin of error +/- 2%
orrect answer
orrect answer
Total holding period return= 0 / 2 pts
Question 12
01/07/2023, 15:21
Practice Quiz 2: Principles of Finance (M)
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8/18
Emmy is analysing a two-share portfolio that consists of a utility share
and a commodity share. She knows that the return on the utility has a
standard deviation of 24 percent, and the return on the commodity has
a standard deviation of 27 percent. Calculate the variance of the
portfolio if the covariance (σ
) is 0.16, assuming an equal proportion of
each share in Emmy’s portfolio
(Round all answers to 4 decimal places, i.e., 0.0768)
Variance, Var(R
)
= 12
2 asset port
0.19
ou Answered
ou Answered
0.1126
orrect answer
orrect answer
This question is related to the section of: Portfolios with more
than one asset, with the formula of:
Var(R
) = x
σ
+ x
σ
+ 2x
x σ
2 asset port
1
2
1
2
2
2
2
2
1
2
12
0 / 2 pts
Question 13
An investment opportunity requires a payment of $14,000 for 21 years,
starting today. If your required rate of return is 3.33 percent, the value
of the investment is $
today.
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
230,043.04
ou Answered
ou Answered
216,069 margin of error +/- 2%
orrect answer
orrect answer
01/07/2023, 15:21
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9/18
This question is related to the section of: Present value of an annuity due. With the formula of: 0 / 2 pts
Question 14
Suppose you borrow $474,000 for a home loan.
The interest rate is 8% per annum nominal, and the loan is for 24
years.
If you make monthly repayments, how much is each repayment?
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
3,352.88
ou Answered
ou Answered
3,706.94 margin of error +/- 2%
orrect answer
orrect answer
Solve the monthly fixed cash flows (PMT) of PV ordinary annuity
formula.
2 / 2 pts
Question 15
Rajesh Sachdeva bought a Honda Civic for a price of $9,832,050. He
put down $8,641,015 and financed the rest through the dealer at an
APR of 8.1 percent for four years. If payments are made monthly, the
effective annual rate (EAR) is? %
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Round your answer to 2 decimal places. E.g. if the interest rate is
5.8312%, please type 5.83 in the answer box (do not type the
percentage sign).
8.51
Correct!
Correct!
8.41 margin of error +/- 2%
orrect answer
orrect answer
This question is related to the section of: Effective Annual Rate.
With the formula of: m is the frequency of compounding, which means that m = 12. 0 / 2 pts
Question 16
Barbara is considering investing in a share and is aware that the return
on that investment is particularly sensitive to how the economy is
performing. Her analysis suggests that four states of the economy can
affect the return on the investment. Using the table of returns and
probabilities below, find the expected return on Barbara’s investment.
Probability
Return
Boom
0.5
25.00%
Good
0.2
43%
Level
0.1
46%
Slump
0.2
-5.00%
Expected return, E(R ) = (Round intermediate calculations to 6 decimal places, round final
answer to 4 decimal places, i.e., 0.0768.)
i
01/07/2023, 15:21
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24.7
ou Answered
ou Answered
0.247 margin of error +/- 2%
orrect answer
orrect answer
This question is related to the section of: Calculating the
variance and standard deviation.
2 / 2 pts
Question 17
Your father is 75 years old and wants to set up a cash flow stream that
would be forever. He would like to receive $46,000 every year,
beginning at the end of this year. If he could invest in account earning 6
per cent, how much would he have to invest today to receive his
perpetual cash flow?
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
766,666.67
Correct!
Correct!
766,666.67 margin of error +/- 2%
orrect answer
orrect answer
This question is related to the section of: Perpetuity, with the
formula of: 0 / 4 pts
Question 18
01/07/2023, 15:21
Practice Quiz 2: Principles of Finance (M)
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12/18
You are currently 35 years old. You plan to retire at age 60 and to
invest $22,000 each year into a retirement savings account.
Your first amount invested starts one year from now.
If the interest rate is 7% per annum nominal, how much money will you
have when you retire?
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
1,210,783.52
ou Answered
ou Answered
1,391,479 margin of error +/- 2%
orrect answer
orrect answer
This question is related to the section of: Future value of an
ordinary annuity , with the formula of: 0 / 4 pts
Question 19
Assume that you have just retired. You have a balance of $4 million.
You invest this amount in an account that pays 9.8% and you expect to
live for another 32 years.
If you start withdrawing funds one year from now, how much can you
withdraw each year so that nothing is left in the fund after 32 years?
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
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31,129.4
ou Answered
ou Answered
412,719.54 margin of error +/- 2%
orrect answer
orrect answer
Solve the fixed cash flows (PMT) of PV ordinary annuity
formula.
4 / 4 pts
Question 20
In an annuity product sold by a life insurance company, you have to
pay a lump sum amount today.
In return, you receive a constant amount every end of the year, until
you pass away.
Assume that the discount rate is 9.3% per annum nominal.
If it is assumed that you will live for another 29 years, and the life
insurance company will pay you $30,000 each year, what is the amount
of money that you need to pay the life insurance company today?
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
293,412.26
Correct!
Correct!
298,110 margin of error +/- 2%
orrect answer
orrect answer
01/07/2023, 15:21
Practice Quiz 2: Principles of Finance (M)
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14/18
This question is related to the section of present value of an
ordinary annuity. With the formula of: 4 / 4 pts
Question 21
Stephanie Holland plans to adopt the following investment pattern
starting next year. She will invest $1,131 in each of the next two years,
and then make investments of$3,736 over each of the following two
years. Each of the investment occurs at the end of the year. If the
investments are expected to earn 3.39 percent annually, she will have
$
at the end of the four years.
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
10,206.34
Correct!
Correct!
10,057.6 margin of error +/- 2%
orrect answer
orrect answer
01/07/2023, 15:21
Practice Quiz 2: Principles of Finance (M)
https://myuni.adelaide.edu.au/courses/82892/quizzes/157123
15/18
This question is related to the section of: Future value with
multiple cash flows.
FV of the first cash flow at the end of year 4 (invested for 3
years), FV = CF
x (1+i)
FV of the second cash flow at the end of year 4 (invested for 2
years), FV
= CF
x (1+i)
FV of the third cash flow at the end of year 4 (invested for 1 year
) FV = CF
x (1+i)
The last cash flow invested at the end of year 4 = CF
Total cash flow at the end of year 4 = FV
+ FV
+ FV
+ CF
1
1
3
2
2
2
3
3
4
1
2
3
4
0 / 4 pts
Question 22
Kania White is a sales executive at a Brisbane company. She is 25
years old and plans to invest $9,739 each year in a retirement savings
account until she turns 65 years old. If the investments occur at the
beginning of each year, and the retirement savings investment will earn
5.34 percent annually, she will have $
at age 65.
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
1,031,440.39
ou Answered
ou Answered
1,347,096.65 margin of error +/- 2%
orrect answer
orrect answer
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This question is related to the section of: Future value of an
annuity due, with the formula of: 0 / 5 pts
Question 23
Syed Ali is a sales executive at a Brisbane company. He is 25 years old
and plans to invest $4,820 each year in a retirement savings account
until he turns 65 years old. If the investments occur at the beginning of
each year, and the retirement savings investment will earn 9.52 percent
annually, he will have $
at age 65.
Round your intermediate calculations to 6 decimal places, round
your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
10,924,325.43
ou Answered
ou Answered
2,051,435.23 margin of error +/- 0.3
orrect answer
orrect answer
This question is related to the section of: Future value of an
annuity due, with the formula of: 5 / 5 pts
Question 24
01/07/2023, 15:21
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Kate recently invested in real estate with the intention of selling the
property one year from today. She has modeled the returns on that
investment based on two economic scenarios. She believes that if the
economy stays healthy, then her investment will generate a 25 percent
return, while the return will be -15% percent if the economy slips into a
recession. If the probabilities of the healthy and recessionary states
are 0.7 and 0.3, respectively, then what is the standard deviation of the
return on Kate’s investment?
(Round intermediate calculations to 6 decimal places, round final
answer to 2 decimal places 1.45% 18.33% Correct!
Correct!
1.06% 13% This question is related to the section of: Calculating the
variance and standard deviation. 0 / 5 pts
Question 25
You are now 47 years old and planning to retire at age 68. You
currently have: $171,000 in a share portfolio; $279,000 in a
superannuation plan; $73,000 in a money market account.
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The share portfolio is expected to generate a rate of return of 9.9% per
annum. The superannuation plan is expected to generate a rate of
return of 6.1% per annum. The money market account is expected to
generate a rate of return of 4% per annum, compounded monthly.
If you also contribute $1,000 into your superannuation plan every year
(starting one year from now), how much will your investments be worth
when you retire?
Round your answer to 2 decimal places. E.g. if the final value is
$12345.8342, please type 12345.83 in the answer box (do not type
the dollar sign).
520,611.05
ou Answered
ou Answered
2,418,260.26 margin of error +/- 2%
orrect answer
orrect answer
This question is related to the section of: Future value with
multiple cash flows.
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Question 1
What is the Payback Period for the following investment?
Year
1
2
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O a. 3.77
Ob. 3.73
Oc. 3.89
Od. 3.96
Cash Out
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(710,000)
Cash In
550,000
580,000
610,000
640,000
670,000
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Exercise 9-12 a-b (Part Levei SubmiSSion)
CES
CALCULATOR
PRINTER VERSION
4 ВАCK
Oriole Supply Co. has the following transactions related to notes receivable during the last 2 months of 2020. The company does not make entries to accrue interest excer
ES-
December 31.
Nov. 1 Loaned $23,500 cash to Manny Lopez on a 12-month, 12% note.
t
Sold goods to Ralph Kremer, Inc., receiving a $61,200, 90-day, 10% note.
Dec. 11
16
Received a $97,200, 180 day, 8% note in exchange for Joe Fernetti's outstanding accounts receivable.
31
Accrued interest revenue on all notes receivable.
(a)
Your answer is correct.
Journalize the transactions for Oriole Supply Co. (Ignore entries for cost of goods sold.) (Credit account titles are automatically indented when amount is ente
indent manually. Use 360 days for calculation. Round answers to 0 decimal places, e.g.…
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Use the information above to complete the missing values in the table below $2,500 invested 4% interest.
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Your grandfather has agreed to deposit a certain amount of money each year into an account paying 7.90 percent annually to help you
go to graduate school. Starting next year, and for the following four years, he plans to deposit $2,350, $8,600, $7,200, $6,600, and
$12,150 into the account. How much will you have at the end of the five years? (Round answer to 2 decimal places, e.g. 15.25.)
Future value at end of five years
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Assignment - 11. Quiz: Savings Accounts
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COURSES
Attempt 1 of 1
1
2
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4
Which functions denotes the value of a car loan that accrues 18% annual simple interest for t years?
Of (t) = 10000 + 120t
Og(x) = 10000 + 12t
Oh(x) = 12000t
Ok (x) = 10000 1.12t
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Suppose you are paid $3,000 per month and your employer's 401(k) matches your contributions by 10% up to a
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much will the 401(k) be worth when you retire (if you can get an APR of 8% during your work years)? If you are
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Course: UNIV
University of the People
Borrowing
Your business requests a 3-month loan for
$500,000. What will be the interest paid at the
end of the term if the business risk percentage is
assessed at 2.2% and LIBOR is at 2.8%?
interest paid = $ [ ? ]
Round to the nearest hundredth.
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https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf
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IS Weygandt, Accounting Principles, 13th Edition, Custom WileyPLUS Course for Bronx Community College
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CALCULATOR
Exercise 9-15 a-c (Part Level Submission)
On May 2, Marigold Company lends $9,500 to Chang, Inc., issuing a 6-month, 8% note. At the maturity date, November 2, Chang indicates that it cannot pay.
(a)
Prepare the entry to record the issuance of the note. (Credit account titles are automatically indented when amount is entered. Do not indent manually
Date
Account Titles and Explanation
Debit
Credit
May 2
SHOW LIST OF ACCOUNTS
SA
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The parts of this question must be completed in order. This part will be available when you complete the part above.
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