FIN 550 Final Exam All Possible Questions 2 Sets

FIN 550 Final Exam All Possible Questions 2 Sets

• Question 1

The five major classes of ratios include the following, except

• Question 2

Which of the following statements regarding financial risk and business risk is true?

• Question 3

Which of the following is not a flow ratio?

• Question 4

Which of the following ratios is not a measurement of the firm’s liquidity?

• Question 5

A common-size income statement expresses all income statement items

• Question 6

The growth rate of equity earnings without external financing is equal to

• Question 7

The most appropriate discount rate to use when applying the Operating Free Cash Flows model is the firm’s

• Question 8

All of the following are ways in which a firm can increase its growth rate of equity earnings without any external financing except

• Question 9

Which of the following is an underlying assumption of the constant growth dividend discount model (DDM)?

• Question 10

Dividend growth is a function of

• Question 11

The dividend payout ratio for the aggregate market is 65 percent, the required rate of return is 13 percent, and the expected growth rate for dividends is 8 percent. Compute the current earnings multiple.

• Question 12

The correlation of stock market returns between the U.S. and Japan is ____ and ____.

• Question 13

Which of the following economic series are included in the NBER lagging indicator series?

• Question 14

The growth rate will most likely increase if the:

• Question 15

If, for the S&P Industrials Index, the profit margin was .25 and the equity turnover ratio was 12, the ROE would be:

• Question 16

At what stage in the industrial life cycle is there an influx of competition?

• Question 17

To estimate earnings per share an analyst will start by estimating

• Question 18

During a recession,
• Question 19

In which industrial life cycle stage do sales correlate highly with an economic series or the economy in general?

• Question 20

Which of the following is not characteristic of the “decline” phase of the industry life cycle?

• Question 21

A speculative stock possesses a ____ probability of ____ return and is currently ____.

• Question 22

Which of the following is not considered when looking at free cash flow to equity technique?

• Question 23

Under the present value of operating free cash flow technique, the firm’s operating free cash flow to the firm is discounted at the firm’s
• Question 24

In Berkshire Hathaway annual reports Warren Buffett highlights financial tenets that he believes are important. Which of the following is not a financial tenet of Warren Buffett?

• Question 25

Which of the following statements concerning SWOT analysis is false?

FIN 550 Final Exam Part 2

• Question 1

A stock currently sells for $75 per share. A put option on the stock with an exercise price $70 currently sells for $0.50. The put option is

• Question 2

Which of the following is consistent with put-call-spot parity?

• Question 3

An advantage of a forward contract over a futures contract is that

• Question 4

The cost of carry includes all of the following except

• Question 5

A call option in which the stock price is higher than the exercise price is said to be

• Question 6

The basis (Bt,T) at time t between the spot price (St) and a futures contract expiring at time T (Ft,T) is

• Question 7

The bond that maximizes the difference between the invoice price and the delivery price is referred to as the

• Question 8

An investor who wants a long position in a ____ must first place the order with a broker, who then passes it on to the trading pit or electronic network. Details of the order are then passed on to the exchange clearinghouse.

• Question 9

When F0,T > E(ST) it is known as

• Question 10

According to the cost of carry model the relationship between the spot (S0) and futures price (F0,T) is

• Question 11

A vertical spread involves buying and selling call options in the same stock with

• Question 12

In a money spread, an investor would

• Question 13

In the Black-Scholes option pricing model, an increase in time to expiration (T) will cause

• Question 14

The Black-Scholes model assumes that stock price movements can be described by

• Question 15

Which of the following is not a variable required to determine an option’s value in the Black-Scholes valuation model?

• Question 16

Investment companies or mutual funds that continue to sell and repurchase shares after their initial public offerings are referred to as

• Question 17

Investing in emerging markets can be viewed as a global application of

• Question 18

The Securities Act of 1933

• Question 19

Which of the following are guiding principles for ethical behavior in the asset management industry as put forward by the CFA Center for Financial Market Integrity?

• Question 20

An investment vehicle that acts like a mutual fund of hedge funds, and allows investors access to managers that might otherwise be unavailable is known as

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