Name ________________________ Section _____ ID # __________________ Prof. King's section C & Prof. Alagurajah's sections A and D) AK/ADMS 3530 Final Exam

Summer 3 years ago

August fourteenth. 7 -10 pm

Type A Test

50 Mcq (Total of 164 marks) made up a follows thirty-two Calculation Queries (4 signifies each for any total of 128 marks) 18 Conceptual Questions (2 marks every single for a total of thirty six marks) Opt for the response which usually best answers each issue. Circle the answers below, and fill in your answers on the bubble sheet. Only the bubble sheet is used to ascertain your examination score. MAKE SURE YOU BLACKEN THE BUBBLES CORRESPONDING TO YOUR PUPIL NUMBER.

Please note the following factors:

1) You should use your time and efforts efficiently and start with the inquiries that you are most comfortable with initial.

2) Read the exam inquiries carefully;

3) Choose the answers that are closest to your own, because of likely rounding; 4) Keep at least a couple of decimal locations in your calculations and final answers, including least4 fraccion places intended for interest rates;

5) Interest rates will be annual unless otherwise explained;

6) Provides pay semi-annual coupons unless otherwise mentioned;

7) Bonds have a par value (or face value) of $1, 000; and

8) You may use the back of the exam daily news as your recycle paper. All the best.

32 Computation Questions (4 marks each)

1 . The normal stock of Robin's Equipment sells intended for $24. 60. The business beta is definitely 1 . 2, the riskfree rate can be 4%, and the return in the marketplace portfolio is definitely 12%. Following year's dividend is anticipated to be $1. 50. Let's assume that dividend expansion is expected to remain constant for Robin's Tools in the foreseeable future, precisely what is the business's anticipated gross growth price?

A)

B)

C)

D)

E)

6th. 65%

several. 48%

being unfaithful. 15%

13. 6%

15. 0%

Remedy: B

3rd there’s r = 4% + 1 ) 2 by (12% -- 4%) = 13. 6% and

$24. 50 = $1. 50 / (13. 6% -- g)

Causes g = 7. 48%

2 . What is the produce to maturity on a 10-year zero-coupon connection with a $1, 000 confront value advertising at $742?

A)

B)

C)

D)

E)

three or more. 03%

7. 42%

13. 48%

thirty four. 78

40. 37%

Option: A

YTM = (1000/742) 1/10 -1 =. 03029 or three or more. 03%

a few. Consider the next monthly money flows (see the plan below):

By

Today

Unces

X

Unces

X

Z

1

two

3

5

19

20

Cash runs of an sum X are made for months one particular, 3, your five, вЂ¦, 18 and nineteen (the eight oddnumbered months) and funds flows of an amount Z . are made for months 2, some, 6, вЂ¦, 18 and 20 (the ten even-numbered months). This is 6% and is exponentially boosted on a monthly basis. Precisely what is the present value of these funds flows today if Times = $2, 000 and Z sama dengan - $700?

A) 12, 311

B) 12, 406

C) 25, 569

D) 25, 664

E) thirty-two, 955

Option: B

The monthly interest is zero. 5% nevertheless since the X's cash goes are made every two months, we should calculate the 2-months equal interest rate: I2m = 3rd there’s r = (1 + zero. 5%) a couple of в€’ you = 1 ) 0025%

The present value of the Z's money flows has by:

Employing your calculator:

I2m = 1 ) 0025%, n=10, PMT sama dengan -700, FV=0, COMP PV

PVz0 = -$6629. 02 at t=0 (Since fist payment begins at t=2 and " i" is definitely calculated for every 2 month period, and last payment is at t=20)

And the present value of the X's is given by:

Seeing that X commences at t=1, using your calculator for a frequent annuity will give PV by t =-1: I2m sama dengan 1 . 0025%, n=10, PMT = 2k, FV=0, COMPENSATION PV

PVx--1 = -$18, 940. 07 at t= -1 (Since fist payment begins in t=1 and " i" is worked out for every two month period, and previous payment are at t=19, you are really calculating PV of an annuity for t= -1)

To adjust pertaining to PVx in t=0-> 18, 940. '07 x (1. 005)1 = $19, 034. 77 The entire present benefit (Z + X) is definitely equal to:

PHOTO VOLTAIC = $19, 034. seventy seven в€’ $6, 629. 02 = $12, 405. seventy five

4. TD Bank's profits and returns are expected to grow at a rate of 10% during the next 2 years, for 8% in the third year, and at a constant rate of 6% thereafter. If last dividend paid out was $2. 00 and the required price of come back on their common share is 12%. How much if you decide to pay today for one talk about of TD Bank?

A) $19. 23

B) $24. 66

C) $38. sixty two

D) $51. 93

E) $55. 41

Solution: C...