Question 25

A $40 stock with a 4% dividend yield and an anticipated growth rate of 6%, what is the estimated shareholder expected rate of return if the U.S. T-bill rate is 2%?

a. 12%

b. 10%

c. 8%

d. 4%

4 points

Question 26

Which of the following is most accurate?

a. If correlation is positive, covariance is positive.

b. If correlation is positive, covariance may be positive or negative.

c. If correlation is positive, covariance is negative.

d. If correlation is positive, covariance will be smaller than correlation.

4 points

Question 27

Portfolio variance is also called

a. market risk.

b. total risk.

c. business risk.

d. diversifiable risk.

4 points

Question 28

The equation for the variance of a five-security portfolio has _____ correlation terms.

a. 5

b. 10

c. 15

d. 20

4 points

Question 29

The equation for the variance of a five-security portfolio has _____ variance terms.

a. 5

b. 10

c. 15

d. 20

4 points

Question 30

The efficient frontier contains portfolios that

a. have the least total risk.

b. are not dominated.

c. have the highest expected return.

d. have the highest realized return.

4 points

Question 31

A person owns $10,000 face value of XYZ bonds. These bonds have a conversion price of $45. The bond owner may exchange them for _____ shares of stock.

a. 22.222

b. 45.000

c. 222.222

d. 450.00

4 points

Question 32

Which of the following is the correct calculation of the conversion value?

a. par value/market value

b. conversion price x stock price

c. conversion ratio x conversion price

d. conversion ratio x stock price