**FIN 515 Managerial Finance Week 5 Risk, Return, and the Capital Asset Pricing Model Quiz Answer**

**FIN 515 Managerial Finance Week 5 Risk, Return, and the Capital Asset Pricing Model Quiz Answer**

Week 5 Risk, Return, and the Capital Asset Pricing Model Quiz

Question 1. Which of the following statements is correct?

If a project with normal cash flows has an IRR greater than the WACC, the project must also have a positive NPV.

If Project A’s IRR exceeds Project B’s, then A must have the higher NPV.

A project’s MIRR can never exceed its IRR.

If a project with normal cash flows has an IRR less than the WACC, the project must have a positive NPV.

If the NPV is negative, the IRR must also be negativeQuestion 2. (TCO C) Company A has a beta of 2.77. Company B has a beta of .73. Company C has a beta of .90. The risk free rate is 6% and the market risk premium is 4%. What is the expected return of investing in Company B?

Question 3. Your stock portfolio consists of only two stocks. You have $30,000 in Company A and $35,000 in Company B. Company A has an actual return of -8% and Company B has a return of 12%. What is the return on your portfolio?

Question 4.

Division Asset Beta Next Period’s Expected Free Cash

Flow ($mm) Expected Growth Rate

Oil Exploration 1.4 450 4.0%

Oil Refining 1.1 525 2.5%

Gas and Convenience Stores 0.8 600 3.0%

The risk-free rate of interest is 3% and the market risk premium is 5%.Which is the cost of capital for the oil exploration division closest to?

A) 6.0%

B) 7.0%

C) 8.5%

D) 10.0%Question 5. (TCO E) A company has a capital structure of 40% debt and 60% equity. The YTM on the company’s bonds is 9%, and the company’s effective tax rate is 40%. The CFO has estimated the company’s WACC to be 9.96%. What is the company’s cost of equity?

For getting the instant digital download solution, Please click on the “PURCHASE” link below to get FIN 515 Managerial Finance Week 5 Risk, Return, and the Capital Asset Pricing Model Quiz Answer.

For instant digital download of the above solution or tutorial, please click on the below link and make an instant purchase. You will be guided to the PAYPAL Standard payment page wherein you can pay and you will receive an email immediately with a download link.

In case you find any problem in getting the download link or downloading the tutorial, please send us an email on mail@genietutorial.com