Mid Semester Exam 3 - Prep Quiz

The Security Market Line (SML) plots

Standard deviation (σ) measures a firm's total risk?

With a r >0 payback period will always be lower than discounted payback period

The Operating Cash Flow (OCF) considers change in NWC and CAPEX

A stock is expected to produce: 30% in boom (p=0.05), 9% in normal (p=0.75), -33% in recession. What is the E(R)?

What are Sunk costs, and should we consider them in calculting FCF?

What's the NPV of a machine that has initial cost of -$125,000 and inflows of $50,000, $60,000 and $70,000 (r=0.12)?

What's the IRR of a rocket that has initial cost of -$125,000 and inflows of $50,000, $60,000 and $70,000?

Creating a portfolio of assets that are perfectly correlated will reduce idiosyncratic risk.

Mutually exclusive Projects are those that:

The death of a CEO will affect the returns of a well diversified portfolio

How do you calculate net present value?

When calculating FCF you should:

A well diversified portfolio has the following

The rfr is 3.9 % and the Market Risk Premium is 6.2%. What is the E(R) of a stock with a beta of 2?

Which of the following is TRUE about the profitability index?

A project requires +$4,000 in Ac/recv, +10,000 in inventory, +$5,000 in Ac/payb. What NWC is needed for the project?

The IRR is the discount rate that gives