Question 1. For a portfolio of two stocks, Stock A has an expected return of 5.89% and Stock B has an expected return of 9.65%. Funds are allocated with 67% in Stock A and 33% in Stock B. What is the portfolio expected return?
48.54%
15.54%
7.13%
8.41%
Question 2 Use the Capital Asset Pricing Model to find the required return on the market. Spry stock has a beta of 1.72. The risk-free rate is 3.75% and the expected return on Spry is 16.43%.
21.79%
25.54%
11.12%
1.06%
Question 3 Miner Corporation had 2015 sales of $10,000,000. Its net profit margin was 25%. It paid out 50% of net income in dividends. What was the change in its retained earnings from the beginning of 2015 to the end of 2015?
$5,000,000
$1,250,000
$2,500,000
$1,000,000
Question 4 Charlie Co has a debt ratio, also known as the debt to total assets ratio, of 25%. What is the debt to equity ratio?
300%
25%
33%
75%
67%
Question 5 A portion of a firm's balance sheet is shown below: common stock ($3 par; 250 shares issued): $750; capital in excess of par: $800; and retained earnings: $600. What was the market price per share of the stock when it was originally sold?
$4.07
$8.60
$6.20
$1.07
$3.00
Question 6 Last year Daisy, Inc. had an operating profit of $96,500, paid $13,650 in interest expense. The applicable income tax rate for the year was 28%. The company had 10,000 shares of common stock outstanding at the end of last year. What was Daisy's EPS last year? The company has no preferred stock.
$9.65
$6.95
$5.97
$4.37
Question 7 You are given: Return on Assets = 16%; Total Asset Turnover = 4.0. Compute Net Profit Margin:
4%
64%
16%
25%
21%
Question 8 You have invested 25% of your money in Stock A, 25% in Stock B, and the rest in Stock C. The portfolio beta is 0.75, and the betas of B and C are -0.9 and 1.25 respectively. What is the beta of Stock A?
0.19
0.088
1.40
4.6
Question 9 Currently Awesome Inc. has a required return of 7% and a beta of 0.92. According to the CAPM, Awesome is:
more risky than the market
has an equal risk to the market
can't be compared to the market since the risk free rate is not known
less risky than the market
Question 10 Highlander Life Insurance Corporation has a net profit margin of 10%. It has a total asset turnover ratio of 2.5X. The debt to total assets ratio is 20%. What is the return on equity ratio?
125%
5%
31%
cannot be determined from the given information
Question 124
Given the following information for GrabASnack, Inc: net income = $85,000, beginning of year retained earnings = $25,000, tax rate=28%, common stock dividends paid for the year = $33,000 Compute the end of year retained earnings.
$143,000
-$27,000
$53,200
$77,000
$27,000
Question 12 If the real rate of interest is 3%, inflation is expected to be 2% during the coming year, and the default risk premium, liquidity risk premium, and maturity premium for RelaxATub Co. are all 3% each, what would be the market interest rate on a RelaxATub Co. bond?
3%
10%
16%
14%
Question 13 Moonwalk Manufacturing, a profit-making company, purchased a process line for $170,000 and spent another $45,000 on its installation. The line was commissioned in January 2015 and it falls into MACRS seven-year class life. Applicable income tax rate for Moonwalk Manufacturing is 30% and there is no investment tax credit. Calculate the first year's depreciation expense for this process line if the first year's depreciation percentage is .143.
$34,705
$21,522
$24,310
$30,745
Question 14 Good's EBT is $498,750. What is the marginal tax rate?
Before Tax Income (EBT) Tax Rate
$0-$50,000 15%
$50,001-$75,000 25%
$75,001-$100,000 34%
$100,001-$335,000 39%
$335,001-$10,000,000 34%
$10,000,001-$15,000,000 35%
$15,000,001-$18,333,333 38%
Over $18,333,333 35%
15%
34%
35%
39%
Question 15 Keller's EBT is $630,500. What is the average tax rate?
Before Tax Income (EBT) Tax Rate
$0-$50,000 15%
$50,001-$75,000 25%
$75,001-$100,000 34%
$100,001-$335,000 39%
$335,001-$10,000,000 34%
$10,000,001-$15,000,000 35%
$15,000,001-$18,333,333 38%
Over $18,333,333 35%
35%
38%
34%
39%
Question 16 If Meatloaf Corporation issues 3,000,000 shares of common stock at a $1/share par value, and if the market price of that stock at the time of issue is $8/share, then the value of Capital in Excess of Par in the equity section of the balance sheet is:
$24,000,000
$21,000,000
$3,000,000
$0
Question 17 Suppose there is a two-stock portfolio consisting of Stock A and Stock B. The correlation coefficient of the returns of Stock A relative to the returns of Stock B is +1. The standard deviation of Stock A is 7%. The standard deviation of Stock B is 6%. The weight of Stock A is .2 and the weight of Stock B is .8 in the portfolio. What is the standard deviation of the portfolio?
6.2%
4.4%
3.4%
0.0%
24.6%
Question 18 Below are quotes from four different Nasdaq dealers for RailTech Co. common stock. Which dealer has the best quote if you were looking to buy this stock?
Dealer C bid $66.00 ask $66.35
Dealer A bid $66.15 ask $66.30
Dealer D bid $66.05 ask $66.20
Dealer B bid $66.40 ask $66.45
Question 19 Acme Company had 2014 net income of $3 million. Its end of 2013 retained earnings figure was $45 million. If the company paid $500,000 in cash dividends to its common stockholders in 2014, what would be the amount of retained earnings at the end of 2014?
$42.0 million
$47.5 million
$44.5 million
$41.5 million
Question 20 RailTech Corporation has a return on equity ratio of 40%. Its net profit margin is 6%. Its total asset turnover ratio is 5x. Its sales are $50 million. What is the amount of equity the company has on its balance sheet?
$20 million
$10 million
$600,000
$7.5 million