# FINANCE-You have chosen biology as your college major

Question 1(1 point)

.gif” alt=”Question 1 unsaved”>

You have chosen biology as your college major because you would

like to be a medical doctor. However, you find that the probability of being

accepted into medical school is about 10 percent. If you are accepted into

medical school, then your starting salary when you graduate will be $300,000

per year. However, if you are not accepted, then you would choose to work in a

zoo, where you will earn $40,000 per year. Without considering the additional

educational years or the time value of money, what is your expected starting

salary as well as the standard deviation of that starting salary?

Question 1 options:

Expected Salary $42,000; Std.

Deviation $81,000

Expected Salary $54,000; Std.

Deviation $78,000

Expected Salary $66,000; Std.

Deviation $78,000

None of the above

Save

Question 2(1 point)

.gif” alt=”Question 2 unsaved”>

Given the returns and probabilities for the three possible

states listed here, calculate the covariance between the returns of Stock A and

Stock B. For convenience, assume that the expected returns of Stock A and Stock

B are 0.12 and 0.15, respectively. (Round your answer to 4 decimal

places. For example .1244)

Probability

Return(A)

Return(B)

Good

0.35

0.30

0.50

OK

0.50

0.10

0.10

Poor

0.15

-0.25

-0.30

Your Answer:

Question 2 options:

Answer

Save

Question 3(1 point)

.gif” alt=”Question 3 unsaved”>

In order to fund her retirement, Michele requires a portfolio

with an expected return of 0.11 per year over the next 30 years. She has

decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent

in Stock 2, and 25 percent in Stock 3. If Stocks 1 and 2 have expected returns

of 0.11 and 0.10 per year, respectively, then what is the minimum

expected annual return for Stock 3 that will enable Michele to achieve her

investment requirement?

Your Answer:

Question 3 options:

Answer

Save

Question 4(1 point)

.gif” alt=”Question 4 unsaved”>

The risk per unit of return is measured by the

Question 4 options:

coefficient of variation

median.

variance.

standard deviation.

Save

Question 5(1 point)

.gif” alt=”Question 5 unsaved”>

Lee purchased a stock one year ago for $28. The stock is now

worth $34, and the total return to Lee for owning the stock

was 0.35. What is the dollar amount of dividends that he received

for owning the stock during the year?

Your Answer:

Question 5 options:

Answer

Save

Question 6(1 point)

.gif” alt=”Question 6 unsaved”>

The beta of M Simon Inc., stock is 1.5, whereas the risk-free

rate of return is 0.08. If the expected return on the market

is 0.12, then what is the expected return on M Simon Inc?

Your Answer:

Question 6 options:

Answer

Save

Question 7(1 point)

.gif” alt=”Question 7 unsaved”>

London purchased a piece of real estate last year for $83,100.

The real estate is now worth $100,900. If London needs to have a total

return of 0.23 during the year, then what is the dollar amount of income

that she needed to have to reach her objective?

Your Answer:

Question 7 options:

Answer

Save

Question 8(1 point)

.gif” alt=”Question 8 unsaved”>

The risk-free rate of return is currently 0.02, whereas the

market risk premium is 0.06. If the beta of RKP, Inc., stock is 1.8, then

what is the expected return on RKP?

Your Answer:

Question 8 options:

Answer