Al d the abve D) 69% C)2 oy snok A has the following etume for varous states Sho

Question

Al d the abve D) 69% C)2 oy snok A has the following etume for varous states Shock A's expected retum is C)82% D)54% 11) You are considering buying some stock in Continental Grain. Which of the following are exampe of non-diversifia I Risk resulting from a general decline in the stock market II. Risk resulting from a possible increase in income taxes III. Risk resulting fron an explosion in a grain elevator owned by Continental IV. Risk resulting from a pending lawsuit against Continental ble risks? A)111 and rv B) II, III, and IV C) 1 only D) 1 and 1 12) The present value of $100 received at the end of year 1, $200 received at the end of year 2, and received at the end of year 3, assuming an interest rate of 8 percent is A) $1,181 B) $ 502 5416 D) $ 453 13) Given an expected market return of 12.0%, a beta of 1.25 for First Industries, and a risk-free 4.0%, what is the expected return for First Industries? A) 40% B) 13.0% C) 14.0% D)100% Two sisters each open IRAs in 2011 and plan to invest $3,000 per year for the next 30 years makes her first deposit on January 1, 2011, and will make all future deposits on the first da r. Jane makes her first deposit on December 31, 2011, and will continue to make her an deposits on the last day of each year. At the end of 30 years, the difference in the value of D) S24. rounded to the nearest dollar), assuming an interest rate of 9% per year, will be B) 536,803. C) $12,456. A) $19,837

Explanation / Answer

10.

Expected return = (10% × -30%) + (20% × -10%) + (40% × 10%) + (20% × 18%) + (10% × 35%)

= 3% - 2% + 4% + 3.60% + 3.50%

= 6.10%

Expected return is 6.10%.

Option (A) is correct answer.

11.

Non diversifiable risk are type of risk taht is due to external factor of comapny and it is uncontrolable to the company. Example of non diversifiable risk is Risk arise due to decline in stock market and risk arise due to possible increase in stock market.

SO statement, (I) and (II) is correct answer.

Option (D) is correct answer.

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