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11The risk-free rate is 3.6% and the required return on the market portfolio is11.8%

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11The risk-free rate is 3.6% and the required return on the market portfolio is11.8%. A company that has just paid $1.80 per share in annual dividendshas a beta of 0.9 and long-term growth rate of 5.2%. What is the dollarvalue of this stock?A:$17.25B:$20.99C:$24.56D:$31.14E:$32.7612Rob pays 28% in combined local, state, and federal taxes. If a corporatebond yields 8.3%, what is the after-tax yield?A:2.3%B:6.0%C:8.3%D:10.7%E:11.5%13The risk-free rate is currently 2.8%. In one year the price of a given shareof stock that currently trades at $40 per share is expected to eitherincrease by 8% or decrease by 2%. What is the current value of a call onthis stock with exercise price of $40?A:$0.00B:$1.09C:$1.24D:$1.49E:$1.6214Information included in “tombstone ads” include all of the followingEXCEPT:A:The bond issuerB:The price of the bondC: The size of the issueD: The maturity dateE:The coupon15Advantages of investing in tax-exempt bond funds include all of thefollowing EXCEPT:A:DiversificationB:Provides additional benefits to tax-deferred retirement plansC: Automatic reinvestingD: Fund maintains individual investor’s tax reports and recordsE:Low initial deposit
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The next two problems refer to a four year project with an opportunity cost of 9% andthe following cash flows:16What is the safe-rate-reinvestment-rate IRR for this project?A:10.6%B:11.1%C:11.6%D:12.1%E:12.6%17What is the borrowing-rate-reinvestment-rate IRR for this project?A:10.6%B:11.1%C:11.6%D:12.1%E:12.6%18The satisfaction an investor gets out of consumption of goods and servicesand out of obtaining a given level of wealth isA:GreedB:UtilityC:ReturnD:RiskE:Beta19Susan has 40% of her portfolio invested in a mutual fund to track the S&P500 and 40% in a mutual fund to track the Dow Jones Industrial Average(DJIA) and 20% in government securities. To evaluate the performance ofher portfolio, what is Susan’s best benchmark?A:the DJIA IndexB:the S&P 500 IndexC:a government security indexD:a 50%/50% combination of A and BE:a combination of A, B, and C20Duration
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