FIN 534 FINAL EXAM WEEK 11PART 2

Aug 9th, 2016
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Question 1 Which is the best measure of risk for an asset held in isolation, and which is the best measure for an asset held in a diversified portfolio? Variance; correlation coefficient. Standard deviation; correlation coefficient. Beta; variance. Coefficient of variation; beta. Beta; beta Question 2 Which of the following statements about pension plans if any, is incorrect? A defined contribution plan is, in effect, a savings plan that is funded by employers, although many plans also permit additional contributions by employees. Under a defined benefit plan, the employer agrees to give retirees a specifically defined benefit, such as $500 per month or 50 percent of the employee’s final salary. A portable pension plan is one that an employee can carry from one employer to another. An employer’s obligation is satisfied under a defined contribution plan when it makes the required contributions to the plan. The risk of inadequate investment returns is borne by the employee.

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FIN 534 FINAL EXAM WEEK 11PART 2Question 1Which is the best measure of risk for an asset held in isolation, and which is the best measure foran asset held in a diversified portfolio?Variance; correlation coefficient.Standard deviation; correlation coefficient.Beta; variance.Coefficient of variation; beta.Beta; betaQuestion 2Which of the following statements about pension plans if any, is incorrect?A defined contribution plan is, in effect, a savings plan that is funded by employers, althoughmany plans also permit additional contributions by employees.Under a defined benefit plan, the employer agrees to give retirees a specifically defined benefit,such as $500 per month or 50 percent of the employees final salary.A portable pension plan is one that an employee can carry from one employer to another.An employers obligation is satisfied under a defined contribution plan when it makes therequired contributions to the plan. The risk of inadequate investment returns is borne by theemployee.If assets exceed the present value of benefits, the pension plan is fully funded.Question 3You have the following data on three stocks:StockStandard DeviationA0.150.79B0.250.61C0.201.29BetaAs a risk minimizer, you would choose Stockif it is to be held in isolation and Stockis to be held as part of a well-diversified portfolio.A; A.A; B.B; C.if itC; A.C; B.Question 4Which of the following statements concerning capital structure

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