Project #24616 - Finance Quiz 5

Good Morning,

My finance homework is an 8 question quiz. There are 2 multipule choice questions and 6 finance mathematics questions. I've attached the quiz. Thanks for your help.

 

Question 1 (1 point)

 

 

You have chosen biology as your college major because you would like to be a medical doctor. However, you find that the probability of being accepted into medical school is about 10 percent. If you are accepted into medical school, then your starting salary when you graduate will be $300,000 per year. However, if you are not accepted, then you would choose to work in a zoo, where you will earn $40,000 per year. Without considering the additional educational years or the time value of money, what is your expected starting salary as well as the standard deviation of that starting salary?

 

Question 1 options:

 

A. Expected Salary $42,000; Std. Deviation $81,000

 

B. Expected Salary $54,000; Std. Deviation $78,000

 

C. Expected Salary $66,000; Std. Deviation $78,000

 

D. None of the above

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 2 (1 point)

 

 

Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.11 and 0.16, respectively.

 

Probability

Return(A)

Return(B)

Good

0.35

0.30

0.50

OK

0.50

0.10

0.10

Poor

0.15

-0.25

-0.30

 

Your Answer:

 

 

 

 

 

Question 3 (1 point)

 

 

In order to fund her retirement, Michele requires a portfolio with an expected return of 0.11 per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock 3. If Stocks 1 and 2 have expected returns of 0.10 and 0.09 per year, respectively, then what is the minimum expected annual return for Stock 3 that will enable Michele to achieve her investment requirement?

 

Your Answer:

 

 

 

 

 

 

Question 4 (1 point)

 

 

The risk per unit of return is measured by the


 

Question 4 options:

 

A. coefficient of variation

 

B. median.

 

C. variance.

 

D. standard deviation.

 

 

Question 5 (1 point)

 

 

Lee purchased a stock one year ago for $28. The stock is now worth $30, and  the total return to Lee for owning the stock was 0.37. What is the  dollar amount of dividends that he received for owning the stock during the  year?

 

Your Answer:

 

 

Question 6 (1 point)

 

 

The beta of M Simon Inc., stock is 1.8, whereas the risk-free rate of return  is 0.10. If the expected return on the market is 0.13 percent, then what is  the expected return on M Simon Inc?

 

Your Answer:

 

 

 

Question 7 (1 point)

 

 

London purchased a piece of real estate last year for $85,300. The real estate  is now worth $104,500. If London needs to have a total return of 0.20 during the year, then what is the dollar amount of income that she needed to  have to reach her objective?

 

Your Answer:

 

 

 

Question 8 (1 point)

 

 

The risk-free rate of return is currently 0.03, whereas the market risk premium is 0.04. If the beta of RKP, Inc., stock is 1.7, then what is the expected return on RKP?

 

Your Answer:

 

 

Subject Mathematics
Due By (Pacific Time) 03/09/2014 06:00 pm
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